OIL PRODUCTS: Asian LSFO Cracks Reach near 5-Month High: Platts

Asia’s LSFO crack surged to its highest level in nearly five months, while the market structure also strengthened to its widest backwardation since early March, Platts said.

• The market has been buoyed by tight prompt supplies due to a recent uptick in downstream bunkering activity.
• The Singapore front-month crack spread for 0.5% sulphur fuel oil was assessed at $12.77/b, the highest since March 25.
• The LSFO market is tightening with lesser arbitrage volumes coming from the west and slightly better outflow demand from China.
• How sustainable this strengthening in levels is will depend on Chinese demand.
• Yet, some remain sceptical on LSFO fundamentals continuing their upward trajectory, amid steady flows arriving from Nigeria’s Dangote refinery.
• Exports from Al Zour could also increase in the coming weeks as Kuwait’s summer power generation demand starts to abate. However, Al Zour is also set for planned maintenance in Q4.