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2025-09-12 18:17:48
Asia-Pacific Fuel Oil Crack Spreads Plummet! Beware of Oversupply. ⑴ The crack spread for very low sulfur fuel oil (VLSFO) in the Asia-Pacific region has fallen to its lowest level since January 2023, reflecting market concerns about ample supply. This week, the crack premium for the October VLSFO contract in Singapore was $5.75 per barrel, a sharp drop of nearly 30% from the previous week. Despite lively discussions at the Asia-Pacific Petroleum Conference, market sentiment remained subdued, with traders generally citing difficult market conditions. ⑵ The fundamental reason for the market weakness is weak fuel oil demand and persistently high supplies in Asia. A Malaysian refinery recently sold additional low sulfur straight run fuel oil (LSSR) through a tender due to equipment outages. Two cargoes are scheduled for shipment on September 15-16 and September 24-25, respectively. Meanwhile, the high sulfur fuel oil (HSFO) market also came under pressure, with cracks falling for the fifth consecutive week. The Singapore 380cst HSFO crack was trading at a discount of slightly more than $5 per barrel. ⑶ Inventory data showed that fuel oil inventories in the ARA region fell 3.5% to 1.04 million tons in the week ending September 11. However, heavy oil inventories in Fujairah rebounded 27.9% to 7.1 million barrels in the week ending September 8. Singapore fuel oil inventories fell slightly by 3.2% to 26.53 million barrels in the week ending September 10. Overall, supply pressure remains significant.
