HSFO
HSFO was well supported this fortnight until the sell-off in crude from Apr 30 onwards catalysed overwhelming bearishness in the complex, with this slightly more pronounced in European grades.
Jun 380 and 3.5% barge cracks strengthened significantly across the fortnight, from -$8.60/bbl to -$6.10/bbl and -$10.10/bbl to -$8.45/bbl, respectively. For the 380 crack, we saw trade houses and funds go long, from a net position of 0mbbls to on Apr 21 to over 1.3mbbls on May 01.
By contrast, the 380 E/W saw support throughout April. The first leg of the fortnight saw support on the back of weakening 3.5% barge cracks. However, the following week saw aggressive buying in Sing 380 spreads by trade houses. Despite this, the rally this week was much softer amid the strength in European HSFO.
VLSFO
VLSFO this past fortnight was weak relative to HSFO with the weakness predominantly led by Euro 0.5% barges.
Price action plummeted in the Jun VLSFO barge crack from an intraday high of $5/mt at the start of the fortnight to $3.65/mt come May 02. We saw trade houses selling the contract in the latter half of the fortnight alongside a major who was aggressively selling Euro 0.5% spreads all week.
The 0.5% E/W has predominantly traded sideways over the past two weeks with Euro VLSFO weakness offsetting Sing 0.5% weakness. In addition, we saw trade houses flip from net selling to net buying the 0.5% E/W in this time.
In regards to the prompt VLSFO Sing crack, price action softened in the first week of the fortnight, down from $11.85/bbl on Apr 19 to lows of $10.40/bbl come Apr 25. In the latter week, prices were more rangebound, mostly trading between $10.20-10.70/bbl, closing at $10.50/bbl come May 02.
