SINGAPORE: The front-month price differential between Asia's 10ppm gas oil and 0.5% very low-sulphur fuel oil (VLSFO) rose on Tuesday, snapping six straight sessions of declines as VLSFO prices fell. The front-month price spread firmed to minus $4.18 a barrel on Tuesday, up from a near one-month low of minus $4.38 a barrel on Monday, Refinitiv data in Eikon showed.
The VLSFO market weakened on Tuesday, giving up gains in its front-month time spread and crack to Dubai crude in the previous session, as ample supplies and sluggish demand remain a concern, trade sources said.
Crude oil prices dropped for a second session on Tuesday on worries about slower fuel demand growth as outbreaks of the highly contagious Delta variant of coronavirus sparked new mobility restrictions around the world.
Two VLSFO cargo trades were reported in the window totalling 60,000 tonnes. Gunvor sold both cargoes with a 20,000-tonne cargo going to Vitol and a 40,000-tonne cargo to Freepoint. Vitol bought a 20,000-tonne 180-cst high-sulphur fuel oil (HSFO) cargo from PetroChina.
A total of 360,000 tonnes of fuel oil cargoes have traded in the window so far this month including 200,000 tonnes of VLSFO and 160,000 tonnes of HSFO. In May, a total of 200,000 tonnes of fuel oil were traded, the lowest monthly volumes since at least the start of 2016, or as far as available records go.
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