Prompt timespreads for 380-cst high sulphur fuel oil (HSFO) have flipped into a backwardated market structure as of Wednesday, after holding in contango for months, trade sources said.
Singapore’s 380-cst HSFO balance-January/February timespread was pegged in a backwardation of 50 cents a metric ton at the Wednesday Asia close, according to data from sources.
The spread has been holding in contango since mid-October, according to LSEG data.
The flip reflects improving sentiment for the prompt market outlook, though some trade sources said this was not fundamentally driven. Meanwhile, spot differentials for HSFO continued to trade at a discount.
As for very low sulphur fuel oil (VLSFO), the spot market slipped back into a discount as of Wednesday, following two sessions of short-lived premiums. Offers for the product dipped back into discounted territory, with one trade emerging.
In other spot sales, India’s HPCL offered more HSFO for loading in January via a tender closing on Thursday. The cargo of 33,000 tons is expected to load between January 20 and 22 from Vizag port.
Cracks for fuel oil inched up on Wednesday. VLSFO February crack (LFO05SGBRTCMc1) closed at a premium close to $3.50 a barrel, based on data by LSEG, while the 380-cst HSFO crack (FO380BRTCKMc1) rose to a discount of around $5.80 a barrel.
INVENTORY DATA
– Fujairah heavy fuel inventories (FUJHD04) fell 10.2% to 8.90 million barrels (1.40 million tons) in the week to January 5, FOIZ data published by S&P Global Commodity Insights showed.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: One trade
Source: Reuters
