Asian low-sulfur fuel oil premium softens from highs as new cargo arrivals pressure near-term structure
- Asia's ultra-low sulfur fuel oil spot premiums retreated on Friday, with both cargo and bunker fuel premiums softening. Market sources said expectations of fresh supply arriving soon have eased previous tightness, and spot quotes showed marginal downward signs in the second half of July.
- The near-month contract price spread tightened to a shallower spot premium. Although the Singapore-delivered bunker fuel premium pulled back after surging from the previous week, it remains high at around $100/ton, indicating spot liquidity has not fully loosened.
- The 380-cst high sulfur fuel oil, after consecutive recent declines, stabilized. The prompt monthly spread structure strengthened slightly but remains in a futures premium state. The fundamental divergence between high and low sulfur grades remains significant.
- The crack spread performance diverged: VLSFO crack spread eased slightly, declining to a premium of $12.55/barrel, while the 380-cst HSFO crack spread rebounded to nearly -$6.25/barrel.
- ARA hub inventory data show fuel oil stocks fell 0.4% week-on-week to 751,000 tons. Low inventory continues to support bottom prices, but short-term market focus is on the pace of new cargo arrivals and the spillover impact of US-Iran negotiation progress on energy sentiment.
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