Asian fuel oil premiums rise as supply risks return to focus

what happened

Reuters reported that spot premiums for fuel oil increased on Monday as market sentiment remained volatile after recent major attacks on Saudi Arabia. High-sulphur fuel oil (HSFO) strengthened in unsettled trading, with timespreads improving as traders grew concerned about renewed supply disruptions. Singapore 380-cst HSFO changed hands at a higher cash premium than at the prior close. The cash differential for very low sulphur fuel oil (VLSFO) also recovered after reaching an almost three-month trough in the previous session, while offers for November loadings edged higher.

Cracks for both grades advanced. The 380-cst HSFO crack reached nearly $9 a barrel at the Asian close, LSEG data showed. VLSFO’s crack (LFO05SGBRTCMc1) rose as well, ending above a $24.65-a-barrel premium. US refiners are expected to have roughly 528,000 barrels per day (bpd) of capacity offline in the week ending October 16, IIR Energy said, leaving 51,000 bpd more refining capacity available.

Crude prices moved in both directions on Monday as investors weighed indications that the Saudi attacks could restrict supply against the possibility of extra barrels after US President Donald Trump praised new Russian diesel exports. Saudi authorities proceeded with the WPC Energy Congress in Riyadh despite deadly attacks on the capital claimed by Yemen’s Iran-aligned Houthis, while several senior energy executives were removed from the event schedule. OPEC Secretary General Haitham Al Ghais said on Monday that the group now sees oil-demand growth at 400,000 barrels per day this year, compared with 1.4 million bpd at the beginning of the year. Ukrainian President Volodymyr Zelenskiy said he was awaiting details of the energy truce with Russia announced by Trump on Sunday, adding that Ukraine supported it.

The trading window recorded no deals in 180-cst HSFO or 0.5% VLSFO and one in 380-cst HSFO. Asian close assessments in $/tonne were: 180-cst cargo 773.09, change 27.40, previous close 745.68; differential 45.65, change 1.91, previous 43.74; 380-cst cargo 768.06, 28.20, previous 739.86; differential 47.00, 1.65, previous 45.35; 0.5% VLSFO cargo 831.86, 17.77, previous 814.10; differential 21.54, 0.97, previous 20.57. Derivatives prices are available through ENSWAP/INFO under FO180SGSWMc1, FO180SGSDMc1, FO380SGSWMc1, FO380SGSDMc1, LFO05FSGMc1, LFO05FSGSMc1, FO180BRTCKMc1, FO180SGCKMc1, FO380BRTCKMc1, FO380DUBCKMc1, LFO05SGBRTCMc1, LFO05SGDUBCMc1, FOVISSGDFMc1, FO05-380SGMc1, GO10FO05FSGMc1, FOSGEWMc1, HFOFARAAMc1, HFOFARAASMc1 and HFOFARAACMc1.

why it matters

Higher physical premiums and stronger cracks point to a tighter risk assessment in Asian fuel-oil markets. Geopolitical developments, US refinery availability and weaker demand expectations may continue to shape pricing across fuel oil and crude.

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