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Asia Fuel Oil-VLSFO weakens; Kuwait Al Zour offers April supply

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Asia’s very low sulphur fuel oil (VLSFO) market softened on Tuesday, with Kuwait’s Al Zour refinery slated to close a supply tender for April, trade sources said.

Al Zour offered a VLSFO cargo for loading between April 4 and 5 in a tender that closes on Tuesday, sources said. The cargo comprises 120,000 metric tons of VLSFO.

Singapore’s spot differentials for VLSFO fell to premiums below $1.50 a ton on Tuesday, while cracks LFO05SGDUBCMc1 dipped slightly below premiums of $12 a barrel.

High sulphur fuel oil (HSFO) benchmarks also weakened as plentiful supplies prevailed.

The cash differential for 380-cst HSFO weakened to a discount of $2.95 a ton, while cracks FO380DUBCKMc1 softened to discounts of $10.50 to $11 a barrel.

Meanwhile, the spot discount of 180-cst HSFO FO180-SIN-DIF also continued to widen amid the presence of a competitive offer.

INCOMING SUPPLIES

Fuel oil supplies to East Asia held above 6.5 million tons for March, compared to just about 5 million tons in February, calculations based on LSEG ship-tracking data showed Tuesday.

The surge was led by an influx in Russian barrels, while arrivals from the Middle East and the U.S. also edged higher, the data showed.

OTHER NEWS

– Oil prices were largely steady on Tuesday near four-month highs after breaking above range-bound trading last week, but the prospect of rising exports from Russia weighed amid Ukrainian attacks on refineries.

– Russia will increase oil exports through its western ports in March by almost 200,000 barrels per day against the monthly plan to 2.15 million bpd, and market participants expect a further increase in exports amid ongoing drone attacks on Russian refineries.

– Iraq will reduce its crude exports to 3.3 million barrels a day in the coming months to compensate for exceeding its OPEC+ quota since January, the oil ministry said on Monday, a pledge that would cut shipments by 130,000 bpd from last month.

– U.S. crude oil stockpiles in the Strategic Petroleum Reserve at year-end will be at or exceeding the level prior to a massive 180 million barrel sale two years ago, U.S. Energy Secretary Jennifer Granholm said.

WINDOW TRADES O/AS

– 180-cst HSFO: No trade
– 380-cst HSFO: One trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Mrigank Dhaniwala)


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