Weekly fuel round up: HSFO cracks slump, 0.5% in Asia rise v Dubai
Quantum Commodity Intelligence – The price of marine fuel 0.5% sulfur cargoes loading out of Singapore hit record highs this week as crude soared to levels not seen since 2014, pushing up the price of delivered fuel at the hub to an eight-year peak of $780/mt.
On Thursday, cargoes loading 15-30 days forward were assessed by Quantum at $760.25/mt FOB Singapore, up $58/mt on 18 February levels, but by Friday prices had eased back to $746.50/mt.
Cash premiums are at a chunky $17/mt above underlying swaps, according to Quantum data, and the March/April spread rose to $21.50/mt, a near record high and a steep market structure that reflects the tightness of the crude market.
Physical cracks versus Brent fell, however, to $10.36/b on Friday, down $0.70/b on the week, although they were up $0.38/b versus Dubai as the Brent/Dubai spread soared on expected tightness in European markets.
Zhoushan bunkers continued to trade at steep discounts to those in Singapore, reflecting the tightness of the market in Southeast Asia with gasoil increasingly expensive.
Stocks fell sharply in Singapore and rose in Fujairah last week, but the overall change was minimal, with the former falling 2.7 million barrels week-on-week and the latter increasing 2.8 million barrels over the same period.
The gasoil 0.25% versus 10ppm cargo assessment, which typically traded at a $2/b discount last year, has been close to $1/b for weeks, reflecting the demand for sulfur.
Over in Europe, the fears of a decline in Russian supply was largely shrugged off alongside a small decline in stocks in ARA, with barge cracks falling sharply over the week.
FOB March barge swaps versus Brent May futures fell from $2.63/b a week ago to about $1.80/b on Friday.
That divergence in price has widened the arb from west to east, with March swaps for Asia at a $44/mt premium, $4/mt wider on the week.
HSFO
HSFO refining margins versus Brent and Dubai crashed, with the 380cst assessment falling $2.50/b versus Brent and $2.80/b versus Dubai.
As HSFO is a pure residual fuel, unlike marine fuel 0.5%, higher crude inputs are expected to pressure the cracks.
Flat prices hit eight-year highs on Thursday of $550/mt FOB Singapore for cargoes loading 15-30 days forward, but by Friday they fell to $526.25/mt as crude cooled.
That figure remains up $26/mt on the week, but it was mostly fuelled by higher inputs and not demand.
The market reflects that with the backwardation for HSFO nothing like that seen for 0.5%, and both 180cst and 380cst were showing a much milder backwardation of $2-4/mt.
Over in Europe, cracks were down $3/b over the week, mirroring the move in Asia.
The east-west was marginally wider, at $10.75/mt for March versus $8/mt a week ago.
At these prices, shipowners are expected to take energy-saving measures, sources say.