HSFO cracks rally in Asia and Europe despite Fujairah stock build

London (Quantum Commodity Intelligence - The recovery in high sulfur fuel oil cracks continued Wednesday despite the rise in residual stocks in Fujairah.

The spot crack for the residual fuel in Singapore gained $0.23/b to -$9.07/b, up from -$11.07/b on May 24, Quantum data shows.

There was also similar rises along the curve into 2022.

Cracks for the next 12-month of swaps in HSFO 380 cst increased for the sixth day in a row.

The paper market for high sulfur fuel oil barges in ARA also saw similar gains at the time of the Singapore market close.

June paper for HSFO barges was up $0.28/b compared to the 1630 UK time Tuesday, according to brokers, and was pegged around -$10.78/b.

High sulfur fuel oil cracks in Asia and Europe turned a corner on May 24 to end a long decline from mid-April.

The shift in trend has continued despite latest stock data from Fujairah showing residual fuel stocks up 2.78 million barrels over the week to May 31, reaching 14.65 million barrels, the third highest weekly total in more than nine months and 40% above the average levels for 2019.

HSFO spot barge cracks in ARA remain far below levels in mid-April when they peaked at -$8.36/b.

But news of OPEC+ continuing to adopt a cautious approach to releasing more sour crude onto the global markets, as well as the rebounding of demand in global trade, has corrected the market over the last week.

Traders have also discarded the propsect of a quick return of residual-rich Iranian crude oil.