SINGAPORE: Asia’s cash premiums for cargoes of 0.5% very low-sulphur fuel oil (VLSFO) fell to a more than two-month low on Wednesday as deal activity in the Singapore window spiked. VLSFO cash premiums fell to $9.50 a tonne to Singapore quotes, down from $12.40 in the previous session and the lowest since Nov. 19.
A total of 160,000 tonnes of fuel oil cargoes were traded in the Singapore trading window on Wednesday, the highest in volume since Jan. 5, 2021, when 200,000 tonnes of fuel oil cargoes were dealt.
VLSFO were always weaker in the paper markets with front-month backwardation falling to a near three-week low of $10.25 a tonne and the front-month crack dropping to a near three-week low of $14.21 a barrel above Dubai crude, Refinitiv-Eikon data showed.
Meanwhile, fuel oil inventories in the Fujairah bunkering and storage hub were down 1% to a two-week low in the week ended Jan. 24, data released on Wednesday showed.
“Fujairah appears relatively well-stocked and fuel oil inventories built last week,” said Refinitiv Oil Research analyst Timothy France, adding that weather disruptions have impeded offshore shipping and bunkering activities, with logistical constraints boosting VSLFO delivered barge premiums.
Fujairah Oil Industry Zone inventories for heavy distillates and residues slipped 115,000 barrels, or about 18,000 tonnes, lower to 9.84 million barrels, or 1.55 million tonnes, data via S&P Global Platts showed.
Fujairah’s fuel oil inventories were 2% lower than year-ago levels.
Residual fuel stocks in Fujairah have 9.77 million barrels so far this year, compared to a 2021 average of 10.26 million barrels.
According to assessments by Refinitiv Oil Research, exports from the UAE fell to 115,000 tonnes in the week ended Jan. 23, down from 408,000 tonnes in the previous week.
Six VLSFO cargo trades were reported in the window totalling 120,000 tonnes along with two high-sulphur fuel oil (HSFO) cargo deals totalling 40,000 tonnes.
Kuwait’s KPC offers a slop of cargo, which includes a mix of heavy fuel oil, coker gasoil and trim gasoil, totalling between 19,500 tonnes and 23,000 tonnes for Jan. 30-31 loading in a tender closing on Jan. 26 with same-day validity.
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