Recovering Chinese demand kept the Asia fuel oil market supported on Thursday, with traders eyeing a potential supply crunch in the first-half of the next quarter.

Supply disruptions are expected following a fire at Venezuela's largest refinery in late August. The OPEC member is a leading supplier of fuel oil into Asia through Chinese trader PetroChinac.

Demand has been picking up in China, particularly among the smaller teapot refiners as inventories start to ease. Another boost to demand has been the healthy refining margins for gas oil.

"At the moment demand is picking up, but it could be better," a Singapore-based fuel oil trader said.

"As always the Chinese buyer is extremely price sensitive, if we had a slightly softer flat price we would have seen a quicker take up, so buyer and seller are still haggling over the price point."

The fuel oil timspread for September/October inched up 13 cents to a backwardation of $4.13 a tonne, while the October/November backwardation remained firm at $4.13 a tonne, according to Reuters assessment.

*TENDERS:
    - Taiwan's Formosa Petrochemical Corp is offering 10,000 tonnes of pyrolysis fuel oil (PFO) and 35,000 tonnes of high sulphur fuel oil (HSFO), for Sept. 28-30 lifting from Mailiao, via tender which closes on Sept. 14, with same-day validity.