The Asian diesel backwardation continues to show weakness, while the high-sulfur fuel oil crack spread plunges into deep negative territory.
- On Tuesday, the Asian diesel market structure softened for the second consecutive trading day as May-loading refinery spot sales were rolled out across the board. The diesel spot premium slipped slightly to about $17.1 per barrel, while the crack spread edged up and hovered near $46.6 per barrel.
- In the jet fuel market, increased output expectations from Northeast Asian refiners brought additional supply, but uncertainties around China’s exports continued to support bargaining levels. The jet fuel premium over diesel remained firm at nearly $19 per barrel. No spot deals for diesel or jet fuel were concluded in the Singapore window.
- Naphtha crack spreads hovered around $267 per ton, and the gasoline crack spread held steady at $23.7 per barrel, with spot trading remaining subdued and no transactions concluded.
- The high-sulfur fuel oil market saw a significant expansion of losses, with spot premiums for nearby contracts narrowing sharply. The intermonth spread came under selling pressure, and the 380-cst high-sulfur fuel oil crack spread against ICE Brent crude flipped from a premium to a discount, closing at minus 30 cents per barrel.
- The very low sulfur fuel oil market was relatively stable. Although the crack spread fell below $9 per barrel, spot premiums were basically unchanged from the previous day. According to sources, limited blending component supply provided support.
- The divergence in refined oil crack spreads reveals the underlying logic of terminal demand. The narrowing of negative diesel crack spreads reflects accumulating spot supply pressure, while the collapse in the high-sulfur fuel oil crack structure points to the Singapore hub’s sensitivity to Middle Eastern cargo flows. If uncertainty around Hormuz Strait transit persists, the fundamental gap between high- and low-sulfur fuel oil is set to widen further.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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