SINGAPORE: Asia’s cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) climbed for a fifth straight session on Wednesday, lifted by active buying interest for physical cargoes amid limited supplies.
Cash premiums for Asia’s 0.5% VLSFO rose to $19.91 a tonne to Singapore quotes, a level not seen since Dec. 6. They were at $18.40 per tonne a day earlier.
The March/April VLSFO time spread widened to $26.50 a tonne on Wednesday, compared with $24.75 a tonne on Tuesday.
The front-month VLSFO crack jumped to $24.67 per barrel against Dubai crude during Asian trading hours, a fresh high since January 2020. The crack was at $22.35 per barrel on Tuesday.
Meanwhile, the 380-cst HSFO barge crack for April traded at a discount of $21.01 barrel to Brent on Wednesday, while cash premiums for 380-cst high sulphur fuel oil (HSFO) rose to $1.30 per tonne to Singapore quotes.
“The Russia-Ukraine crisis has cast uncertainty around Russian loadings from its Far East, Baltic Sea and Black Sea ports, with some shippers refusing to load cargoes from there, amid escalating tensions and sanctions,” Refinitiv Oil Research analysts said in a note.
“This could lead to a potential crunch in HSFO inflows ... though we believe that the supply impact on East Asia’s market is minimal for now, given that Russia-origin cargoes account for only about 10% of total imports into Singapore.”
Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues fell 6.5% from the previous week to 9.8 million barrels (1.5 million tonnes) in the week ended Feb. 28, data via S&P Global Platts showed.
Compared with year-ago levels, the weekly fuel oil inventories at FOIZ were about 2% higher.
Fuel oil stocks at FOIZ average 9.9 million barrels so far this year, compared with a weekly average of 10.3 million barrels in 2021, Reuters calculations showed.
One 380-cst high-sulphur fuel oil (HSFO) deal, no 180-cst HSFO trades. No VLSFO trade were reported.
Oil prices surged on Wednesday as supply disruption fears mounted following hefty sanctions on Russian banks amid the intensifying Ukraine conflict, while traders scrambled to seek alternative oil sources in an already tight market.
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