Asia Fuel Oil-VLSFO trades into discounts; HSFO rally continues

SINGAPORE, Feb 3 (Reuters) - Asia’s very low sulphur fuel oil (VLSFO) market traded into discounts on Tuesday, while the high sulphur fuel oil (HSFO) market extended its rally into firmer premiums. Several trades for VLSFO emerged at softer values from the previous day, as expectations of more supply continued to weigh on the prompt market. In contrast, HSFO cash differentials retained strength, with trades emerging at steady-to-stronger premiums. Reflecting the ongoing strength in HSFO and weakness in VLSFO, the hi-5 spread, which is the premium of VLSFO over 380-cst HSFO, narrowed sharply in recent sessions. The front-month hi-5 premium closed at about $44 a metric ton as of Tuesday, clinging near 11-month lows, based on data by LSEG. (FO05-380SGMc1) Meanwhile, fuel oil cracks traded broadly rangebound from the previous day. The 380-cst HSFO crack (FO380BRTCKMc1) held at a discount near $6 a barrel at the Asia close, while VLSFO’s crack (LFO05SGBRTCMc1) was at a premium near $4 a barrel. REFINERY UPDATES - Indian refiners will need a wind-down period to complete Russian oil deals before imports from that country can be halted, and they have so far not been ordered by the government to stop such imports, two refining sources said. OTHER NEWS Oil prices fell 1% on Tuesday, dropping for a second day, as market participants weighed the possibility of a de-escalation in U.S.-Iran tensions, while a firmer dollar added downward pressure. (O/R) - U.S. President Donald Trump on Monday announced a trade deal with India that slashes U.S. tariffs on Indian goods to 18% from 50% in exchange for India halting Russian oil purchases and lowering trade barriers. - Venezuelan oil exports rose to some 800,000 barrels per day in January, from 498,000 bpd in December, after the U.S. capture of Nicolas Maduro and the ending of an oil blockade which has let traders carry most exports, shipping data showed. - A deal between Indian Oil Corp and global trader Vitol to form an equal trading joint venture has been delayed due to differences over some clauses in the contract, two sources familiar with the matter said. WINDOW TRADES (O/AS) 180-cst HSFO: One trade 380-cst HSFO: Three trades 0.5% VLSFO: Six trades ASSESSMENTS FUEL OIL CASH ($/T) ASIA CHANGE PREV RIC CLOSE CLOSE Cargo - 0.5% VLSFO 442.51 2.53 439.98 (MFO05-SIN) Diff - 0.5% VLSFO -0.52 -0.52 0.00 DIF> Cargo - 180cst 406.08 6.00 400.08 (FO180-SIN) Diff - 180cst 10.25 1.50 8.75 DIF> Cargo - 380cst 405.78 5.89 399.89 (FO380-SIN) Diff - 380cst 14.11 1.61 12.50 DIF> Bunker (Ex-wharf) 2.00 1.00 1.00 Premium - 380cst Bunker (Ex-wharf) 5.00 0.00 5.00 Premium - 0.5% VLSFO For a list of derivatives prices, please refer to ENSWAP/INFO or the RICs below: 180cst M1 (FO180SGSWMc1) 180cst M1/M2 (FO180SGSDMc1) 380cst M1 (FO380SGSWMc1) 380cst M1/M2 (FO380SGSDMc1) 0.5% VLSFO M1 (LFO05FSGMc1) 0.5% VLSFO M1/M2 (LFO05FSGSMc1) Cracks 180cst-Brent M1 (FO180BRTCKMc1) Cracks 180cst-Dubai M1 (FO180SGCKMc1) Cracks 380cst-Brent M1 (FO380BRTCKMc1) Cracks 380cst-Dubai M1 (FO380DUBCKMc1) Cracks 0.5% VLSFO-Brent M1 (LFO05SGBRTCMc1) Cracks 0.5% VLSFO-Dubai M1 (LFO05SGDUBCMc1) Visco 180cst/380cst M1 (FOVISSGDFMc1) Hi-5 0.5% VLSFO/380cst M1 (FO05-380SGMc1) GoFo 10PPM/0.5% VLSFO M1 (GO10FO05FSGMc1) East-West M1 (FOSGEWMc1) Barges M1 (HFOFARAAMc1) Barges M1/M2 (HFOFARAASMc1) Crack Barges-Brent M1 (HFOFARAACMc1)