SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash differential was at its highest in over a month on Wednesday as concerns of oversupply continued to fade.
But sluggish demand in the Singapore bunkering hub, amid stiff price competition from China’s bunkering hub of Zhoushan, might keep a lid on prices.
The VLSFO cash discount climbed to minus 8 cents a tonne on Wednesday, up from minus 45 cents in the previous session and its highest since May 3.
Surging crude oil prices, however, dragged the front month VLSFO crack 16 cents lower to $11.61 a barrel above Dubai crude, Refinitiv data in Eikon showed.
Oil gained for a fifth day on Wednesday, climbing towards $75 a barrel to its highest since April 2019, supported by a recovery in demand from the pandemic and a drop in US crude inventories.
Meanwhile, fuel oil inventories in the Fujairah bunkering and storage hub fell 11% to a three-week low in the week ended June 14, data released on Wednesday showed.
Despite sluggish bunkering demand, the lower Fujairah fuel oil inventories came amid limited imports, trade sources said.
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