Supply surge suppresses Asian oil market, high-sulfur fuel oil premium drops below $9

⑴ On Monday, the Asian high-sulfur fuel oil spot price spread retreated, as a large influx of supply is expected this month and next. The total supply of fuel oil arriving in Asia this month is about 6 million tons, an increase of more than 5% compared to last month. The supply growth mainly comes from the Middle East, including high-sulfur fuel oil shipped from the UAE and ultra-low sulfur fuel oil from Kuwait. ⑵ The spot premium for Singapore 380cst high-sulfur fuel oil fell below $9 per ton, after remaining above $10 throughout this month. Crack spreads also came under pressure, with 380cst high-sulfur fuel oil closing at a discount of about $5.35 per barrel, while ultra-low sulfur fuel oil maintained a premium of nearly $6.25 per barrel. ⑶ Diesel market trading was somewhat subdued, with the 10ppm diesel crack spread remaining flat at around $21.5, and the spot price spread falling to $1.05 per barrel, the lowest level since February 5. The gasoline crack spread held steady near $6, while the naphtha crack spread rose to $90.73 per ton due to weaker crude oil, but sluggish demand limited the upside potential.