SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash differential climbed to a near two-year high on Monday after eight straight sessions of gains amid concerns over tightening supplies.
The VLSFO market has rallied over the past week amid limited refinery output as well as firm power generation and bunkering demand. The VLSFO cash premium jumped to $20.13 a tonne to Singapore quotes on Monday, up from $18.83 a tonne on Friday.
The cash differential was last higher in early-February last year when the global sulphur cap came into effect at the start of 2020 and caused a global surge in VLSFO demand.
Overall floating storage inventories for residual fuel in the Malacca Strait rose in the week ended Nov. 24, rebounding from a more than one-year low in the previous week amid higher high-sulphur fuel oil (HSFO) inventories, according to data intelligence firm Kpler.
Total floating storage inventories rose by 137,000 tonnes, or 6%, from the previous week to a two-week high of 2.57 million tonnes.
Floating stocks of HSFO jumped 30%, or 109,000 tonnes, to 476,000 tonnes in the week to Nov. 24, while stocks of residual fuels with unspecified sulphur content rose by 34,000 tonnes, or 9%, to 398,000 tonnes.
By contrast, floating VLSFO inventories slipped 0.4%, or 6,000 tonnes, from the previous week to 1.63 million tonnes. Gunvor bought a 40,000-tonne VLSFO cargo from Vitol at a $25 per tonne premium to Singapore quotes.
By comparison, a 20,000-tonne VLSFO cargo last traded on Thursday at an $18 per tonne premium to Singapore quotes. No high-sulphur fuel oil (HSFO) cargo trades were reported in the window on Monday.
No 0.5% very low-sulphur fuel oil (VLSFO) or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.
A total of 420,000 tonnes of fuel oil cargoes have traded in the window so far this month, slightly up from the 400,000 tonnes traded in October and above the 280,000 tonnes sold in November last year.
The November volumes included 280,000 tonnes of VLSFO and 140,000 tonnes of HSFO.
The VLSFO deal volumes were up by 56% compared with the October volumes, while HSFO trades were down by 36%.
The most active buyer of VLSFO cargoes in November was Gunvor with 160,000 tonnes, while Trafigura was the top seller with 220,000 tonnes.
Trafigura was the top buyer of HSFO cargoes at 80,000 tonnes, while PetroChina was the top supplier with 60,000 tonnes.
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