Asia’s spot fuel oil differentials held in rangebound discounts on Wednesday, while trade sources eyed more regional supply after Malaysia’s PrefChem offered a fourth cargo of low-sulphur atmospheric residue for November loading.

The refiner offered 540,000 barrels for loading between November 19 and 20, in its latest tender that closes on November 6, sources said.

High supply inventories have limited recovery in fuel oil benchmarks in Asia, with Singapore cash differentials for very low sulphur fuel oil (VLSFO) and high sulphur fuel oil (HSFO) trapped in discounts since early October.

In the spot market, several trades continued to emerge for 380-cst HSFO on Wednesday amid a brisk trading week, with traded values prevailing at steep discounts to cargo quotes.

Meanwhile, fuel oil margins softened day-on-day. The VLSFO crack for December (LFO05SGBRTCMc1) dipped below a premium of $7 a barrel, while 380-cst HSFO crack (FO380BRTCKMc1) closed at a discount wider than $5 a barrel, based on data compiled by LSEG.

INVENTORY DATA

– Fujairah heavy fuel inventories (FUJHD04) climbed 33.4% to 8.66 million barrels (1.36 million tons) in the week to November 3, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

– Oil prices dipped on Wednesday amid a wider slump in financial markets and a strong U.S. dollar, while investors assessed the supply outlook.
– Russian oil major Lukoil is struggling to keep operations running at its sprawling foreign businesses as Western sanctions disrupt oil loadings in Iraq, pump stations in Finland and trading in Switzerland, sources said.
– Global commodities trader BGN sees new sanctions on Russia as an opportunity to boost its presence in the Mediterranean energy products market, its chief executive said on Monday, as it considers investing in petrochemical assets.
– Western sanctions on Russia and Iran are creating record volumes of oil stored onboard vessels, preventing a supply glut from forming in global markets, Gunvor Group’s CEO said on Wednesday.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: Five trades
– 0.5% VLSFO: No trade
Source: Reuters