European fuel oil cracks rally down the curve, outstripping Asia moves

London (Quantum Commodity Intelligence) - Long-dated fuel oil cracks in Europe jumped higher Friday morning, although there there were less gains in Asian cracks, broker data showed, as the latter showed a big stock build this week.

The nearby curve for HSFO barges in Europe was little changed, with July cracks up $0.10/b and August up $0.15/b by 0930 UK time compared with 1630 a day earlier, although there were greater moves further down the curve.

Q4 2021 cracks were up $0.23/b, Q1 2022 were up $0.27/b and Q2 2022 cracks were up $0.32/b.

But the bigger moves were in Q4 2022 and calendar year 2023, which rose $0.41/b and $0.43/b, respectively.

There was a similar pattern in cracks for HSFO FOB prices in the Mediterranean and low sulfur fuel oil FOB northwest Europe, extending a bullish trend for fuel cracks that have been on a steep decline recently.

Q4 HSFO cracks for barges were marked at -$12.26/b just two weeks ago, around 20% lower than current levels amid waning fears that higher sulfur Iranian crude would hit the market and increase supply.

While European cracks firmed, so did Asia, but to a lesser degree.

HSFO 380cst cracks for Q4 were up $0.23/b Friday morning from Thursday evening, aroud the same as HSFO cracks in ARA, but the calendar 2022 curve was up only $0.19/b comoared to $0.35/b for HSFO in ARA.

Both Fujairah and Singapore announced higher residual fuel stocks this week.