Fuel summary: Distillate draw keeps LSFO margins firm
Quantum Commodity Intelligence - Residual fuels continue to be pulled around by the distillates complex, with a persistent tightness of supply of cutter stocks due to rerouted Russian flows keeping low sulfur refining margins buoyant despite a wider selloff in crude.
Flat prices couldn't resist the selloff seen across the oil market this week, with the 0.5%S cargo price in Singapore fell 5% this week to $872.25/mt. Barges in ARA were down 9% to $701.50/mt.
Refining margins remain healthy, with Singapore cargoes up another $0.36/b to +$29.56/b by Friday.
For high sulfur fuel oil, prices further succumbed to the pressure seen across the wider market.
In Asia, 380 CST slipped 13% to a seven-month low $424.25/mt, while European barges slumped 16% to just $394/mt.
For 180 CST, the market dropped 11% in Asia to $463.75/mt, with plenty of power generating interest seen in the Asian trading window as well as private cargoes either booked or sought in South Asia.
For stocks, Singapore residual volumes fell 3% to a two-week low of 20.8 million barrels.
In Fujairah, stocks fell 4% week-on-week to 12.1 million barrels, with the 480,000-barrel draw leaving stocks pulling back from last week's 12-month high.
In the US, weekly EIA data showed fuel oil stocks continuing to climb in their seasonal pattern, up another 2.7 million barrels to 113.8 million barrels and narrowing the gap to the five-year range.
And European stocks were down for a fourth consecutive week, hitting a six-week low of 7 million barrels.
Singapore sales of bunker fuels were down 9% month-on-month to 3.75 million mt as port calls slumped due to the high flat prices on show.
The drop was led by low sulfur fuel oil sales, which fell 13% month-on-month to 2.63 million mt. Higher sulfur fuels fared better, pushing 2% higher on the month to 1.1 million mt.
In Fujairah, sales data showed June volumes down 13%, with low sulfur sales down at a four-month low of 430,000 mt, while HSFO sales were down 14% at a two-month low of 118,000 mt.
Trade flows
And the complexities of the new sanctions regime against Russia continues to throw up new hurdles for the trade, with market talk this week that fuel oil could fall under the EU's coal import ban from as early as August.
While the import of other products is set to be phased out by early next year, the EU ban is based on customs codes, which could see some cargoes falling under the coal heading due to their aromatics content.
In the grand scheme of things, however, the volumes are unlikely to be significant, with rerouted trade flows already showing up elsewhere around the world as Russian fuel oil turns up for storage in Fujairah, in the Baltic States, or on ship-to-ship transfer off the coast of Greece.
On top of that, it emerged this week that Saudi Arabia's imports of Russian fuel oil are running at double where they were this time a year ago – passing the 1 million mt mark as power generators take advantage of steep discounts on offer.
