Asian HSFO premiums plunge as spot offers pull back

what happened

According to Reuters, Asia's high sulphur fuel oil market slipped sharply on Tuesday as offers weakened and values for late-November loadings dropped. The Singapore 380-cst HSFO cash premium sank below $33 a metric ton, compared with more than $49 the day before. The front-month December crack fell to about $4 a barrel from roughly $7 on Monday, according to LSEG data.

Market sources linked the decline to a high volume of incoming supplies last month, while high freight rates and Middle East tensions clouded potential arbitrage arrivals. India's HPCL sold more HSFO cargoes through a tender that closed on Tuesday and offered another cargo from Mumbai.

VLSFO premiums also eased, though by less than HSFO. The December VLSFO crack closed at about $20 a barrel, its second straight decline. Elsewhere, a Ukrainian drone attack damaged a refinery in Yaroslavl, the local governor said, and Kuwait raised its October crude output to 2.1 million barrels per day, according to a person with direct knowledge.

why it matters

For the fuel oil market, this points to easing tightness in Asia: more supply and softer demand are compressing premiums, while high freight and geopolitical risks limit import flows. Premium moves also matter to refiners weighing whether to produce fuel oil relative to crude.

market impact

Asian fuel oil: more supply and weaker demand press HSFO and VLSFO premiums lower

• ▼HSFO premiums in Asia pressure down — higher supply and weaker demand reduce spot premiums
• ▼VLSFO crack pressure down — premiums eased for a second straight session

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instruments