The market structure for fuel oil softened in Asia on Tuesday, with prompt intermonth spreads for both high sulphur fuel oil (HSFO) and very low sulphur fuel oil (VLSFO) slipping into a wider contango.

The contango implies that prompt supply remained available amid high inventories. Meanwhile, spot differentials held in discounts amid more incoming supply.

In the HSFO market, Thailand’s PTT offered three cargoes of 380-cst HSFO for loading in November, higher than the usual one to two cargoes. The tender closed on Tuesday, according to market sources.

Meanwhile, the VLSFO market remained pressured by an already well-supplied market, with two residue cargoes slated to load from Malaysia’s Pengerang. The cargoes usually end up in the VLSFO blending pool.

Cracks were range-bound, with November VLSFO crack still holding above a premium of $6 a barrel, while 380-cst HSFO crack closed at a discount of about $3.75 a barrel, data compiled by LSEG showed.

CHINA DATA

China’s fuel oil imports and bunker exports surged in September, according to latest customs data.

September’s fuel oil imports totalled 2.02 million metric tons, hitting their highest monthly volume year-to-date, led by higher bonded trade.

Meanwhile, exports of fuel oil, mostly for low-sulphur marine fuel bunkering, touched a three-month high of 2.24 million tons.

OTHER NEWS

– Oil prices held steady on Tuesday after a fall in the previous session as concerns about oversupply and risks to demand, along with the trade dispute between the U.S. and China, the world’s top two oil consumers, weighed on the markets.

– Prompt Brent crude futures’ discount to the six-month contract reached its deepest since December 2023 on Monday, reflecting a growing view that supply is ample as OPEC+ and other producers increase output.

– Hungarian oil and gas company MOL was gradually restarting units in its Danube refinery that were not affected by a fire that broke out late on Monday while firefighters were working on the site, the company said on Tuesday.

– Oil majors, including Chevron and Shell, have reduced oil and gas output at a top Kazakhstan field after a Ukrainian drone strike damaged a gas processing plant in Russia that supports their operations, the companies said on Tuesday.

WINDOW TRADES

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