Asia’s spot fuel oil market extended gains on Tuesday, although recovery remains capped as monthly supplies to Asia hit a year-to-date high.
December fuel oil arrivals were at 5.5 to 6.0 million tonnes, the latest assessments by Refinitiv Oil Research showed on Tuesday, with strong arbitrage inflows from the West leading the climb.
Asia is expected to be flooded with more fuel oil supplies in 2023 as Kuwait’s new Al-Zour refinery ramps up output and as Russia diverts record volumes from Europe to the East ahead of sanctions.
While spot fuel oil premiums showed signs of rebounding in Asia this week, gains appeared to be capped.
The cash differential for 0.5% very low sulphur fuel oil rose by 45 cents to a premium of $14.04 on Tuesday, while the cash differential for 380-cst high sulphur fuel oil edged higher by 82 cents to a premium of $2.54 to Singapore quotes.
Oil prices inched higher on Tuesday, supported by a softer dollar and a US plan to restock petroleum reserves, but gains were capped by uncertainty over the impact of rising COVID-19 cases in top oil importer China.
China’s independent refiners are boosting their profits from processing low-priced Russian oil, as western sanctions on Moscow give them leverage to negotiate for steeper discounts.
Japan is sounding out major oil refiners about buying Russian ultra light crude from the Sakhalin-2 gas and oil project to ensure that the plant can continue to operate smoothly.
Malaysia’s state energy firm Petronas said on Tuesday it had won the Agua Marinha exploration block in the Campos Basin during Brazil’s bid round.
