SINGAPORE: Asia’s cash differentials for cargoes of 0.5% very low-sulphur fuel oil (VLSFO) and 380-cst high-sulphur fuel oil (HSFO) dropped to fresh multi-month lows on Monday.
Concerns of ample supplies, as Singapore inventories hit a more than four-year high at the start of May, and weak demand in the spot bunkering and power generation sectors, have hammered Asia’s fuel oil market since late-April. The supply overhang is also not expected to recede over the near term as arbitrage arrivals in June are expected to hold firm, trade sources said.
The VLSFO cash differential sank to a more than eight-month low of minus $2.91 a tonne to Singapore quotes on Monday, while the differential for cargoes of 380-cst HSFO fell to a near 11-month low of minus $2.90 a tonne. One VLSFO trade was reported in the window with Freepoint lifting a 20,000 tonne cargo from P66 at a $3 per tonne discount to Singapore quotes.
This marks the first cargo trade in the window since May 14 and the first VLSFO trade since May 12.
No HSFO cargo trades were reported.
Overall floating storage inventories in the Malacca Strait inched 1% higher in the week ended May 19, lifted higher by a jump in stocks of HSFO, according to data intelligence firm Kpler.
Total floating storage inventories rose 29,000 tonnes to a two-week high of 3.04 million tonnes, the data showed.
This came despite a drop of 200,000 tonnes, or 11%, in IMO-compliant VLSFO supplies which fell to a one-month low of 1.62 million tonnes in the week ended May 19, the Kpler data showed.
Stocks of HSFO jumped by 279,000 tonnes, or 114%, to 524,000 tonnes while stocks of residual fuels with unspecified sulphur contents fell by 50,000 tonnes, or 5%, from last week to 892,000 tonnes, the data showed. Pakistan’s PSO left two tenders for the import of a HSFO and a low-sulphur fuel oil (LSFO) cargo in the second half of June unawarded.
Gunvor had placed the lowest offer for PSO’s tender for 65,000 tonnes of 180-cst HSFO, while Vitol placed the lowest offer for 50,000 tonnes of LSFO. A Singapore court has approved a freeze on up to $3.5 billion of assets of the family behind collapsed Hin Leong Trading Pte Ltd, boosting the prospect of debt recovery from the former oil trading empire that counts some of the world’s biggest banks among its creditors.
In an email reviewed by Reuters on Monday, Hin Leong’s liquidators said Singapore’s High Court had accepted a request to freeze up to $3.5 billion of the global assets of the 79-year-old tycoon, known as O.K. Lim, his son Lim Chee Meng, and daughter Lim Huey Ching.
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