SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash differential and market structure extended gains to fresh highs on Friday, buoyed by firm demand and limited supplies. The VLSFO cash premium to Singapore quotes reached its highest in nearly two years at $18.83 a tonne, up from $14.97 in the previous session and $9.28 last week.
Backwardation in the VLSFO front-month time spread also surged to $19.50 per tonne, up from $16.25 in the previous session and its highest since January 2020, Refinitiv data in Eikon showed. Meanwhile, residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) and Fujairah storage hubs fell this week, while those in the Singapore rose, official data showed.
Fuel oil stocks in the ARA refining and storage fell by 29,000 tonnes to a two-week low of 1.13 million tonnes in the week ended Nov. 25, data from Dutch consultancy Insights Global (IG) showed. Compared with last year, the inventories at the ARA hub were 23% lower, but were slightly above the five-year seasonal average of 1.11 million tonnes.
In the Fujairah hub, fuel oil stockpiles were 16% lower to a three-week low of 9.17 million barrels, or 1.44 million tonnes, in the week to Nov. 22 amid limited imports. In Singapore, fuel oil inventories jumped 7% to a 11-week high of 22.9 million barrels, or 3.61 million tonnes, as net import volumes rose.
No VLSFO or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window. OPEC expects a release of oil stocks by majors consumers to significantly increase a global glut in the next few months, an OPEC source said, just over a week before a meeting to decide immediate output policy.
The volume of the US-led coordinated oil release by consuming countries from national reserves is relatively small and is expected to have a limited impact on oil markets, the head of the Petroleum Association of Japan (PAJ) said on Thursday.