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SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash differential extended gains for a tenth straight session on Wednesday to a fresh two-year high amid firm demand and persistently tight near-term supplies.

The VLSFO cash premium climbed to $22.23 a tonne to Singapore quotes on Wednesday, up from $21.80 a tonne in the previous session.

The cash differential was last higher in early-February 2020 following the introduction of the global sulphur cap at the start of the year that sent the differential to a record $30 per tonne to Singapore quotes.

By contrast, weak demand sent the 380-cst high-sulphur fuel oil (HSFO) cash premium to 30 cents a tonne on Wednesday as suppliers dropped their offers to help stimulate demand.

Meanwhile, fuel oil inventories in the Fujairah bunkering and storage hub surged 30% higher to a more than five-month high in the week ended Nov. 29, data released on Wednesday showed.

The higher inventories came amid higher net imports and despite firm bunker consumption at the Fujairah hub, trade sources said.

Marine fuel sales at the Fujairah hub has strengthened recently with the latest trade data showing October volumes jump 22% from the previous month to their highest on record since data reporting began in January.

Fujairah Oil Industry Zone inventories for heavy distillates and residues jumped by 2.75 million barrels, or about 433,000 tonnes, to 11.91 million barrels, or 1.88 million tonnes, data via S&P Global Platts showed.

Fujairah’s fuel oil inventories were 38% higher than year-ago levels.

According to assessments by Refinitiv Oil Research, exports from the UAE fell to 213,000 tonnes in the week ended Nov. 28, down from 403,000 tonnes in the previous week.

“Middle East fuel oil exports slowed in November driven largely by a dip in loading volumes from Iraq,” according to Refinitiv Oil Research, adding that exports from Saudi Arabia have also slowed while its imports have climbed.

Refinitiv Oil Research assessed regional fuel oil exports for November at 3.78 million tonnes compared to 5.03 million tonnes in October.

No VLSFO or HSFO cargo trades were reported in the Singapore trading window. A fire that broke out in an idle reforming unit undergoing maintenance at Algeria’s Skikda refinery has been brought under control, national energy company Sonatrach said on Tuesday.

Skikda typically exports about 400,000 tonnes per month of low-sulphur straight run fuel oil for use in the VLSFO blend pool and accounts for most of the country’s fuel oil exports.

With the affected unit already offline for maintenance and the extent of the damage unknown, the potential impact on fuel oil exports from the refinery could not be immediately determined.

GS Caltex Singapore Pte Ltd has joined the S&P Global Platts Asia physical bitumen Market on Close (MOC) price assessment process, Platts said in a note to subscribers on Wednesday.

Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash differential marked nine sessions of uninterrupted gains on Tuesday, climbing to a near two-year high amid persistent supply concerns.

The VLSFO market has rallied over the past two weeks on limited refinery output and firm power generation and bunkering demand.

The VLSFO cash premium jumped to $21.80 a tonne to Singapore quotes on Tuesday, up from $20.13 a tonne on Monday and its highest since early-February 2020.

In the paper market, falling crude oil prices helped lift the front-month VLSFO to $14.27 a barrel above Dubai crude on Tuesday, up from a one-week low of $14.14 on Monday and closer to a nine-month high of $14.99 on Nov. 24, Refinitiv data in Eikon showed.

Drugmaker Moderna’s chief executive set off fresh alarm bells in financial markets on Tuesday after he warned that existing COVID-19 vaccines were unlikely to be as effective against the Omicron variant as they have been against the Delta version.

The uncertainty about the new variant has triggered global alarm, with border closures casting a shadow over a nascent economic recovery from a two-year pandemic.

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