SINGAPORE: Worries over plentiful supplies and limited bunkering demand in the Singapore hub tipped the front-month 0.5% very low-sulphur fuel oil (VLSFO) time spread back into a narrow contango on Wednesday.
The July VLSFO time spread slipped to minus 25 cents a tonne, down from a 25 cent premium in the previous session, Refinitiv data in Eikon showed.
The VLSFO front-month crack to Dubai crude, however, slipped just 3 cents to $11.44 a barrel, the Refinitiv data showed, despite crude oil prices climbing to near two-year highs on Wednesday.
Oil rose above $75 a barrel on Wednesday, reaching its highest since late 2018, after an industry report on US crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.
Fuel oil inventories in the Fujairah bunkering and storage hub climbed 5% to a two-week high in the week ended June 21, data released on Wednesday showed.
The higher inventories came amid rising export volumes and weaker bunkering demand in the Fujairah hub on rising crude oil prices, trade sources said.
Fujairah Oil Industry Zone inventories for heavy distillates and residues rose by 582,000 barrels, or about 92,000 tonnes, to 12.94 million barrels, or 2.04 million tonnes, data via S&P Global Platts showed.
Fujairah’s fuel oil inventories, however, were 23% lower than year-ago levels.
According to assessments by Refinitiv Oil Research, fuel oil exports from the United Arab Emirates (UAE) hit a five-month high of 485,000 tonnes in the week to June 20, driven by strong flows to Asia.
“Normal trading volumes have been augmented by ADNOC’s ongoing 127,000 bpd RFCC outage,” said Refinitiv Oil Research in a note, adding that the national oil company sold a fourth 80,000-tonne cargo to PetroChina last week.
Abu Dhabi National Oil Company (ADNOC) in early June resumed exports of straight run fuel oil (SRFO) following an outage at a unit in its 835,000-barrels-per-day Ruwais plant.
No VLSFO or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.
Vitol Bunkers has begun offering marine refuelling services at the world’s busiest container ship port, Shanghai’s Yangshan, along with its partner Zhejiang Seaport International Trading Co Ltd, it said on Wednesday.
The expansion adds to the two companies’ existing bunkering operations in Zhoushan, China’s main bunkering hub, and Ningbo, where they are ranked among the top five suppliers, a company spokesperson said.