Fuel oil premiums in Asia continued their upward trajectory on Wednesday, bolstered by robust activity in the derivatives market. The buying momentum intensified, contributing to a firmer market structure and widening backwardation spreads for key fuel oil grades.
Sources attributed the strength in the derivatives market to increased purchasing by a major trading house. Concurrently, refining margins saw gains, with 380-cst high sulphur fuel oil cracks widening to discounts of approximately $4.50 per barrel. Meanwhile, very low sulphur fuel oil cracks closed higher, commanding premiums around $11.80 per barrel.
Inventory data from S&P Global Commodity Insights revealed a 5.9% decrease in Fujairah heavy fuel inventories, totaling 9.42 million barrels (1.48 million tons) in the week ending July 22, according to FOIZ data.
In other developments, oil prices hovered near their lowest level in six weeks amidst subdued summer fuel consumption in the northern hemisphere. The Russian government is contemplating a ban on diesel exports due to escalating domestic prices.
Meanwhile, Singapore’s Maritime and Port Authority (MPA) disclosed discussions with ship owner Hafnia regarding the transfer of naphtha cargo from the damaged oil tanker Hafnia Nile to a secure location.
Looking ahead, U.S. oil refiners are anticipated to announce significantly lower second-quarter earnings compared to last year, influenced by lackluster refining margins following a tepid summer driving season, analysts noted.
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