Asia fuel oil benchmarks slump as market prices in potential Iran war de-escalation
USO•Asian fuel oil benchmarks fell sharply as traders priced in the possibility of more Middle Eastern supply if the Iran war de-escalates. The 380-cst HSFO Dubai crack fell from a $5.34-per-barrel premium to a $2.29 discount, while October fuel oil arrivals in Asia topped 6 million tons.
1. Benchmarks retreat
Asian fuel oil prices fell this week as traders anticipated higher Middle Eastern crude and fuel supplies. The 380-cst HSFO Dubai-basis crack closed Thursday at a $2.29-per-barrel discount, compared with a $5.34 premium at the start of the week, its lowest level since mid-September. October UAE fuel oil exports bound for Singapore and Malaysia reached about 729,000 metric tons, an eight-month high.
2. Freight limits supply
Some traders expect prices to find support because elevated freight rates continue to restrict cargoes from Europe to Asia. Total fuel oil arrivals in Asia topped 6 million tons in October, a seven-month high, but traders expect November arrivals to taper. Rotterdam-to-Singapore dirty tanker rates eased from a mid-October record of about $168 a ton to about $95 this week, while remaining elevated.
