SINGAPORE, Feb 4 (Reuters) - Asia’s high sulphur fuel oil (HSFO) rally showed signs of stalling on Wednesday, although sentiment was still largely supported, with the market structure holding in strong backwardation.
The Singapore February/March timespread for 380-cst HSFO narrowed to $19 a metric ton on Wednesday, after widening beyond $21 in the previous session, data from trade sources showed. Some sell-offs took place following the recvent surge.
Spot trading momentum also cooled, though several trades for 380-cst HSFO continued to emerge at supportive premiums.
Meanwhile, cash differentials for very low sulphur fuel oil (VLSFO) remained in discounts, though premiums of delivered VLSFO marine fuel in Singapore held firm despite the slump in cargo differentials, said traders.
This was led by tighter barge availability, with many deliveries already lined up ahead of the Lunar New Year.
Fuel oil cracks for both grades firmed in volatile trading. The 380-cst HSFO crack (FO380BRTCKMc1) rebounded to a discount near $5 a barrel, while VLSFO crack (LFO05SGBRTCMc1) rose to a premium near $5 a barrel.
<h3>INVENTORY DATA</h3>
<ul>
<li>Fujairah heavy fuel inventories (FUJHD04) fell 7.9% to 10.53 million barrels (1.66 million tons) in the week to February 2, FOIZ data published by S&amp;P Global Commodity Insights showed.</li>
</ul>
<h3>OTHER NEWS</h3>
<ul>
<li>Oil prices extended gains on Wednesday after the U.S. shot down an Iranian drone and armed Iranian boats approached a U.S.-flagged vessel in the Strait of Hormuz, rekindling fears of an escalation in tensions between Washington and Tehran. (O/R) - The U.S. government is working to issue as early as this week a general license allowing companies to produce oil and gas in Venezuela, as Washington seeks to encourage expanded output in the OPEC nation since capturing its president, three sources close to the matter told Reuters. - Marathon Petroleum said it bought two cargoes of Venezuelan crude oil at the end of January and expects its refineries to process more heavy grades, company executives said during a post-earnings call. - India will diversify its energy sources as a strategy amid changing global circumstances and ensure energy security for its citizens, Trade Minister Piyush Goyal said on Wednesday, days after the U.S. said New Delhi will halt Russian oil purchases.</li>
</ul>
<h3>WINDOW TRADES (O/AS)</h3>
<ul>
<li>180-cst HSFO: No trade</li>
<li>380-cst HSFO: Three trades</li>
<li>0.5% VLSFO: No trade</li>
</ul>
<h3>ASSESSMENTS</h3>
<h3>FUEL OIL</h3>
<h3>CASH ($/T) ASIA CHANGE PREV RIC</h3>
<h3>CLOSE CLOSE</h3>
Cargo - 0.5% VLSFO 454.22 11.71 442.51 (MFO05-SIN)
Diff - 0.5% VLSFO -1.45 -0.93 -0.52 

DIF&gt;
Cargo - 180cst 418.85 12.77 406.08 (FO180-SIN)
Diff - 180cst 10.00 -0.25 10.25 

DIF&gt;
Cargo - 380cst 418.04 12.26 405.78 (FO380-SIN)
Diff - 380cst 13.25 -0.86 14.11 

DIF&gt;
Bunker (Ex-wharf) 2.00 0.00 2.00
Premium - 380cst
Bunker (Ex-wharf) 4.00 -1.00 5.00
Premium - 0.5% VLSFO
For a list of derivatives prices, please refer
to ENSWAP/INFO or the RICs below:
180cst M1 (FO180SGSWMc1)
180cst M1/M2 (FO180SGSDMc1)
380cst M1 (FO380SGSWMc1)
380cst M1/M2 (FO380SGSDMc1)
0.5% VLSFO M1 (LFO05FSGMc1)
0.5% VLSFO M1/M2 (LFO05FSGSMc1)
Cracks 180cst-Brent M1 (FO180BRTCKMc1)
Cracks 180cst-Dubai M1 (FO180SGCKMc1)
Cracks 380cst-Brent M1 (FO380BRTCKMc1)
Cracks 380cst-Dubai M1 (FO380DUBCKMc1)
Cracks 0.5% VLSFO-Brent M1 (LFO05SGBRTCMc1)
Cracks 0.5% VLSFO-Dubai M1 (LFO05SGDUBCMc1)
Visco 180cst/380cst M1 (FOVISSGDFMc1)
Hi-5 0.5% VLSFO/380cst M1 (FO05-380SGMc1)
GoFo 10PPM/0.5% VLSFO M1 (GO10FO05FSGMc1)
East-West M1 (FOSGEWMc1)
Barges M1 (HFOFARAAMc1)
Barges M1/M2 (HFOFARAASMc1)
Crack Barges-Brent M1 (HFOFARAACMc1)

Asia's high sulphur fuel oil (HSFO) rally is stalling, with the February/March timespread for 380-cst HSFO narrowing to $19 per metric ton. Spot trading momentum has cooled, although some trades continue at supportive premiums. Cash differentials for very low sulphur fuel oil (VLSFO) remain in discounts, but premiums for delivered VLSFO marine fuel are firm due to tighter barge availability. Fujairah heavy fuel inventories fell 7.9% to 10.53 million barrels. Oil prices gained amid geopolitical tensions, and the U.S. is considering a license for oil production in Venezuela.

Reuters

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Asia Fuel Oil-HSFO rally stalls though market structure retains strength