SINGAPORE: Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) crack climbed to a near two-week high of $12.79 a barrel above Dubai crude, Refinitiv data in Eikon showed, on a tightening supply outlook and lower crude oil prices.
The VLSFO market has trended higher since the start of the month on a tightening supply outlook and expectations that arbitrage volumes in July and August would narrow, trade sources said.
This also helped lift both VLSFO cash premiums and front-month time spreads to their highest since March earlier in the week.
Oil prices rose on Friday but remained on track for their biggest weekly drop since at least May after expectations of more supply spooked investors.
Residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) storage hub slipped to a near six-month low this week, while those in the Singapore and Fujairah hubs rose, official data showed.
Fuel oil stocks in the ARA refining and storage fell by 29,000 tonnes to 1.21 million tonnes in the week ended July 15, data from Dutch consultancy Insights Global (IG) showed.
The fuel oil inventories were 2% lower amid strong bunkering demand and some export activity, Lars van Wageningen of Insights Global said.
Compared with last year, the inventories at the ARA hub were 19% lower but were slightly above the five-year seasonal average of 1.15 million tonnes.
In the Fujairah hub, fuel oil stockpiles were 6% higher at 11.71 million barrels, or 1.84 million tonnes, in the week to July 12 as exports slowed.
In Singapore, fuel oil inventories rose 1% to a two-week high of 23.09 million barrels, or 3.64 million tonnes, in the week to Wednesday, up 1% from a 3-1/2-month low in the previous week.
Total sold a 20,000 tonne 380-cst high-sulphur fuel oil (HSFO) cargo to Vitol at a 50 cent per tonne premium to Singapore quotes.
No 0.5% very low-sulphur fuel oil (VLSFO) cargo trades were reported in the Singapore window.
India’s BPCL sold up to 30,000 tonnes of 180-cst HSFO with a maximum 4% sulphur content loading from Mumbai over July 30-31 to Vitol at an unknown price level.
India’s Nayara Energy sold up to 40,000 tonnes of VLSFO with a maximum 0.15% sulphur content and a minimum 30-cst viscosity loading from Vadinar over July 26-30 to Mercuria at an unknown price level.