SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) crack firmed on Wednesday on persistently limited supplies of the fuel, despite rising crude oil prices. The front-month VLSFO crack climbed to $16.73 a barrel above Dubai crude, up from $16.56 in the previous session and near a one-year high of $17.84 a barrel hit on Dec. 30, Refinitiv Eikon data showed.
Oil prices hit two-month highs on Wednesday on tight supply and easing concerns about the potential hit to demand from the Omicron coronavirus variant.
This came as fuel oil inventories in the Fujairah bunkering and storage hub fell 9% to a three-week low in the week ended Jan. 10, data released on Wednesday showed.
The lower inventories came against a backdrop of shrinking supplies of finished-grade VSLFO fuels across key storage and trading hubs on reduced refinery output of the fuel and its blending components, trade sources said.
Bunker consumption at the Fujairah hub, however, was sluggish, the sources said.
Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 945,000 barrels, or about 149,000 tonnes, to 9.18 million barrels, or 1.45 million tonnes, data via S&P Global Platts showed.
Fujairah’s fuel oil inventories were 12% higher than year-ago levels.
According to assessments by Refinitiv Oil Research, exports from the UAE fell to just 39,000 tonnes in the week ended Jan. 9, down from 315,000 tonnes in the previous week.
The Fujairah export volumes plunged as “as traders prioritized low-sulphur fuel oil imports following a period of weather disruption,” according to Refinitiv Oil Research.
Refinitiv Oil Research assessed Middle East fuel oil exports at 484,000 tonnes for the week to Jan. 9, compared with 980,000 tonnes in the prior week.
Three VLSFO cargo trades were reported in the window totalling 80,000 tonnes. Three high-sulphur fuel oil cargo trades were reported in the window totalling 60,000 tonnes.
Taiwan’s CPC is seeking a 40,000 tonne low-sulphur fuel oil (LSFO) cargo with a maximum 0.3% sulphur content for delivery into Keelung in February.
In tender awards, South Korea’s KDHC bought a 30,000 tonne 0.3% LSFO cargo for Feb. 1-13 delivery into Pyongtaek from Shell at an unknown price level.
Kuwait’s KPC sold 80,000 tonnes of 380-cst heavy HSFO with a maximum 4% sulphur content loading over Jan. 14-16 to an unknown buyer.
The Gulf Knot aframax tanker, hired by an unspecified charterer, is anchored off of Kuwait awaiting to load a fuel oil cargo in mid-January heading to Asia, according to Refinitiv Eikon data.
Bottlenecks in global container ship traffic are expected to worsen again this year as vessels remain tied up in queues around the world, according to Sea-Intelligence.
“Overall, 11.5% of the global capacity has been taken out of the market due to vessel delays in November 2021, a slight improvement from 12.3% in October 2021,” Alan Murphy, CEO, Sea-Intelligence said in a note late on Tuesday.
“However, judging by the data, it seems that there is no sign of imminent improvement,” said Murphy, adding that under usual circumstances, about 2% of global capacity is trapped in delays.
“All the available data shows that congestion and bottleneck problems are worsening getting into 2022, and there is no indication of improvements as of yet.”
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