Asia’s high sulphur fuel oil (HSFO) market sold off for some derivative contracts on Friday after recent gains in a volatile trading week, while trade sources continued to eye a mixed supply outlook.

The February 380-cst HSFO/Brent crack fell by more than 15% day-on-day to a discount of $7.75 a barrel at the Asia close, based on LSEG data.

The crack was at more than a seven-week high on Wednesday. It has since sold off sharply, trade sources said.

Some traders expect a potentially tighter HSFO market in Asia due to more Venezuelan oil reshuffling to the U.S. Gulf Coast and less to China, though others said that supplies from other origins remained plentiful.

Reflecting some expectations of bearishness in the U.S market, the prompt 380-cst HSFO east-west spread widened to an eight-month high as of early Friday trade, before paring some gains later into the day.

Meanwhile, spot differentials for Asia HSFO continued to hold in discounts by the end of the week.

Separately, differentials for very low sulphur fuel oil (VLSFO) held near parity to cargo quotes on Friday, while cracks for the product (LFO05SGBRTCMc1) fell to premiums near $3.20 a barrel.

INVENTORY DATA

– ARA fuel oil inventories (STK-FO-ARA) fell 3.5% to 1.07 million tons in the week to January 8, based on data from Dutch consultancy Insights Global.
OTHER NEWS
– Oil prices rose for a second day on Friday, up more than 1% and set for their third weekly gain, on uncertainty about the future of supply from Venezuela and as Iranian unrest increases concerns about output there.
– China has issued crude oil import quotas for 2026 to three refineries based in Shandong province, which were sold last year by state-run Sinochem Group to independent operators, two trading sources with knowledge of the matter said on Friday.
– India’s Reliance Industries Ltd, operator of the world’s largest refining complex, said on Thursday it would consider buying Venezuelan oil if it is permitted for sale to non-U.S. buyers.
– Marathon is interested in bidding for Venezuelan crude oil, the company told Reuters on Thursday, as the U.S. administration prepares to start raising imports of oil from the South American country after the ouster of its president Nicholas Maduro on January 3.

WINDOW TRADES

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