Asia Fuel Oil-Fuel oil cracks and visco spreads extend gains on tighter outlook

Improved sentiment stemming from a tighter supply outlook in Asia’s fuel oil markets lifted front-month cracks and visco spreads to multi-week highs on Wednesday, industry sources said.

The September visco spread, the price differential between the front-month 180-cst and 380-cst fuel oil grades, rose for a third consecutive session to $5.50 a tonne on Wednesday, its highest since Aug. 2.

Asia’s 180-cst fuel oil crack to Dubai crude for September rose 8 cents a barrel from the previous session to minus $1.37 a barrel on Tuesday.

Similarly, the front-month 180-cst fuel oil crack to Brent crude was up 23 cents to minus $2.61 a barrel. – Both fuel oil cracks were at their narrowest discounts since July 27.

Bunker fuel suppliers in Singapore on Wednesday raised their offers for delivered bunker fuels after it was announced that a leading marine fuel supplier, Universal Energy, will no longer be able to operate in the market, prompting its clients to seek alternative suppliers.

The Maritime and Port Authority said it would not renew Universal Energy’s licences, criticising the company for actions it said could give a false impression of how much fuel is delivered to buyers.

Universal Energy was ranked by the MPA as the third-biggest marine fuel supplier in Singapore by volume last year, operating 11 bunker barges, two of which it owns and nine it has on charter.

Ten cargo trades were reported in the Platts window, totalling 200,000 tonnes of 380-cst fuel oil. That was the biggest volume since July 28.

A total of 1.38 million tonnes of fuel oil have traded in the window since the start of August, against 1.22 million tonnes in July.

Pakistan’s PSO finalised an October delivery import tender for up to seven high-sulphur fuel oil (HSFO) cargoes totalling 455,000 tonnes, along with one 55,000 tonne cargo.

Saudi’s Samref refinery offered up to 80,000 tonnes of 650-cst to 700-cst HSFO for loading Sept. 17-21 from Yanbu in a tender closing on Aug. 31.

In the United Arab Emirates, the Fujairah Oil Industry Zone (FOIZ) fuel oil inventories edged 0.7 percent higher to a two-week low of 10.787 million barrels in the week to Aug. 28, data via S&P Global Platts showed.

Fuel oil inventories in the Fujairah oil hub were up 76,000 barrels (or about 11,000 tonnes) in the week to Aug. 28. Supplies had dropped by 200,000 tonnes the previous week.

Weekly fuel oil inventories in Fujairah have averaged 10.6 million barrels since records began in January.
Source: Reuters (Reporting by Roslan Khasawneh; Editing by David Goodman)