Asia Fuel Oil-HSFO margin firms to nearly one-year high on lower output

SINGAPORE, May 3 (Reuters) - Asia's refining margin for 380-cst high sulphur fuel oil (HSFO) climbed to nearly a year's high on Wednesday, backed by lower refinery output and seasonal demand expectations. The front-month crack for 380-cst HSFO jumped to a discount of $7.60 a barrel at the Asia close (0830 GMT), while the product's cash premium edged up to $7 a tonne over Singapore quotes. "We view the crude production cuts as constructive to the term structure of an already-strong high sulphur market, with potentially less refinery bottoms production leading to supply tightness, particularly to HSFO output," said Emril Jamil, Refintiv's senior analyst for crude and fuel oil. "Another positive driver is less Russian origin flows due to the ongoing and heavy Russian maintenance season that kicked off in April and is expected to last till early June, with approximately 450,000 bpd of refinery capacity going offline," Jamil said. Meanwhile, the very-low sulphur fuel oil (VLSFO) market also extended further gains on Wednesday, after hitting 11-week highs the previous day. The 0.5% VLSFO front-month crack closed higher at a premium of $9.72 a barrel, while cash premium rose to $13.34 a tonne over Singapore quotes. In recent tenders, Malaysia's RAPID sold 540,000 barrels of high-sulphur atmospheric residue for loading between May 8 and 9, while Kuwait's KPC bought 60,000 tonnes of high-sulphur fuel oil for delivery between May 11 and 12, according to market sources.

OTHER NEWS

- Oil prices extended losses on Wednesday, as investors fretted about the health of the U.S. economy ahead of an expected Federal Reserve interest rate hike later in the day. - A Russian drone strike hit an oil facility in the central Ukrainian city of Kropyvnytskyi in the early hours of Wednesday, causing a major fire, Ukrainian prosecutors said. - A second oil tanker in a week was seized by Iran on Wednesday in Gulf waters, the U.S. Navy said, the latest escalation in a series of seizures or attacks on commercial vessels in Gulf waters since 2019.

- Singapore's Keppel Corp said on Wednesday it would transform itself into an asset manager overseeing $150 billion by 2030 and focusing on green energy, betting it would provide more stable revenue streams and earnings.

WINDOW TRADES - 180-cst HSFO: No trade - 380-cst HSFO: No trade - 0.5% VLSFO: One trade

ASSESSMENTS
FUEL OIL
CASH ($/T) ASIA CLOSE CHANGE PREV CLOSE RIC Cargo - 0.5% VLSFO 545.78 -27.14 572.92 Diff - 0.5% VLSFO 13.34 1.09 12.25 Cargo - 180cst 427.53 -20.56 448.09 Diff - 180cst 3.25 1.17 2.08 Cargo - 380cst 425.48 -21.04 446.52 Diff - 380cst 7.00 0.50 6.50 Bunker (Ex-wharf) Premium - 380cst 12.00 0.00 12.00
Bunker (Ex-wharf) Premium - 0.5% VLSFO 14.00 1.00 13.00
For a list of derivatives prices, including margins, please double click the RICs below. Brent M1 180cst M1 180cst M1/M2 180cst M2 Visco M1 Visco M2 380cst M1 380cst M1/M2 380cst M2 Cracks 180-Dubai M1 Cracks 180-Dubai M2 East-West M1 East-West M2 Barges M1 Barges M1/M2 Barges M2 Crack Barges-Brent M1 Crack Barges-Brent M2 (Reporting by Jeslyn Lerh; Editing by Varun H K)