Asian oil market shows divergence: VLSFO hits four-month high, naphtha nears one-year peak

⑴ Asia's very low sulfur fuel oil (VLSFO) crack spread rose to a more than four-month high on Friday, with the March VLSFO crack spread closing at a premium of $7.75 per barrel. Although the spot price spread remained stable at around $2 per ton, the forward market has shown signs of recovery. According to market sources, the outlook for low sulfur fuel oil supply is mixed, with a slight tightening possible in the short term, but current prompt shipment dates still see ample supply.⑵ The Asian diesel market regained some ground on Friday, with the March-April intermonth contract backwardation widening, while the spot price spread fell to a one-month low of a premium of $0.84 per barrel. Trade sources said that the key driver for April prices will be the volume of China's spot exports, with April spot negotiations set to begin next week. The diesel crack spread was just below $22 per barrel, the lowest point of the week. For jet fuel, China's sales for March cargoes remain active, and the jet fuel/diesel price spread has returned to parity.⑶ Asian naphtha prices rose on Friday, with the crack spread approaching a one-year high, closing at $111 per ton, the highest since the end of March last year. The East-West price spread reached a nearly six-year high of $48 per ton, with active spot trading for April. Most April open-spec naphtha deals were done at a premium of $9 to $13 per ton over the Japan CFR price. The gasoline crack spread rebounded to $8 per barrel from last week, recovering part of the decline over the past three weeks. The 380-cst high sulfur fuel oil remained under pressure, with the crack spread at a discount of $5.15 per barrel.