Asian refining margins have tumbled more than 50% since mid-July on anticipation of plummeting demand for high sulphur fuel oil (HSFO) ahead of a shift to cleaner marine fuels next year.
Complex refining margins for a typical Singapore refinery, an Asian benchmark, had dropped to $4.31 a barrel by the close of markets on Thursday, down from $7.39 at the start of August and a near two-year high of $9.37 on July 11.
“Refining margins have been weighed down by bearish HSFO cracks over the past two weeks, with rampant sell-off and de-stocking of HSFO ahead of IMO 2020,” said Serena Huang, senior market analyst at oil analytics firm Vortexa.
Margins for HSFO, an industrial fuel primarily used in ship engines and power generators, have collapsed this month as the global shipping industry prepares for new International Maritime Organisation (IMO) rules that start from January 2020. Read More
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