In High Sulfur Fuel Oil (HSFO), the risk has been concentrated in the East. The Apr’25 3.5% barge crack softened to -$4.80/bbl but climbed subsequently, reaching -$4/bbl on 28 Feb, at the time of writing. While we see trade houses selling, sellers remain out-of-the-money based on Onyx’s calculations of average entry levels based on the past 7 days and 90 days. Exchange-traded open interest (OI) in the Apr’25 crack is 30% below the 5-year average for this time at 37.6mb, highlighting that there is further room for more selling. In the East, the Apr’25 Sing 380 cst crack has been more rangebound between -$3.30/bbl and -$2.20/bbl this fortnight, although the contract is notably witnessing significant trade house selling against Onyx. Trade houses are also selling the Mar/Apr’25 380 spread and buying the Apr/May’25 380 spread. It will be interesting to see if these players roll over their Mar/Apr’25 shorts into the new prompt spread next week.
