Fuel Oil Benchmarks Steady, Market Supported By Cracks And Inventory Increase

Fuel oil benchmarks showed steady to softer trends at the end of the week, with VLSFO holding a premium of $2 per metric ton, while HSFO softened to a premium of $6.50 per metric ton. Market structure remained supported, with HSFO cracks at discounts and VLSFO cracks holding strong premiums. Inventory levels in the ARA region rose slightly by 0.5%. Meanwhile, global oil markets saw little change, but expectations of increased policy support fueled some optimism. Additionally, U.S. LNG exports reached near-record levels in December.

1. Singapore VLSFO (Very Low Sulphur Fuel Oil):
   • The cash differential for VLSFO was pegged at a premium of $2 per metric ton to cargo quotes on Friday, reflecting little change from the previous day.
   • VLSFO cracks maintained strong levels, with premiums above $10 per barrel, according to data from LSEG.
2. Singapore HSFO (High Sulphur Fuel Oil):
   • The 380-cst HSFO spot deals softened, trading at a premium of $6.50 per metric ton to cargo quotes, lower than previous sessions.
   • Despite the price decline, the HSFO market structure remained supported by intermonth backwardation, which widened at the prompt months, reflecting active buying interest for cracks.
3. Cracks for HSFO and VLSFO:
   • 380-cst HSFO cracks closed at discounts of about $5.65 per barrel.
   • VLSFO cracks held premiums above $10 per barrel, indicating strong market support.
4. Market Activity:
   • Tenders remained thin, with Taiwan’s CPC offering 22,000 tons of catalyst fractionator bottom for loading in January. The tender is open until January 7.

Inventories

• Fuel oil inventories in the ARA region (Amsterdam-Rotterdam-Antwerp) increased by 0.5% to 1.48 million tons in the week ending January 2, based on data from Insights Global.

Other Key Updates

1. Oil Prices:
   • Oil prices remained stable on Friday, after closing at their highest levels in over two months, with market optimism about possible government measures to stimulate global economic growth.
2. Saudi Arabia:
   • Saudi Arabia is expected to raise crude prices for Asian buyers in February, the first increase in three months, reflecting the gains in Middle East benchmark prices last month.
3. Indonesia’s B40 Biodiesel:
   • Indonesian companies will have a 1.5-month transition period to meet the new B40 biodiesel requirement, as confirmed by the Deputy Energy and Mineral Resources Minister.
4. U.S. LNG Exports:
   • U.S. LNG exports hit near-record levels in December, rising to 8.5 million metric tons, contributing to a 4.5% annual increase in exports for the full year 2024.

Window Trades

• 180-cst HSFO: No trades reported.
• 380-cst HSFO: Two trades.
• 0.5% VLSFO: No trades reported