SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market slipped on Monday with losses in cash differentials, time spreads and cracks of the fuel on limited trade activity.
The market has retreated from its recent high in mid-January on signs of marginally higher arbitrage inflows over the near term, trade sources said. The VLSFO front-month time spread fell to a two-week low of $14.25 a tonne on Monday, down by $1.50 from the previous session, while the front-month crack slipped 22 cents to a one-week low of $16.84 a barrel above Dubai crude, Refinitiv-Eikon data showed.
In the physical markets, VLSFO cargo differentials were also down to a one-week low of $12.90 a tonne to Singapore quotes, from $13.53 on Friday.
No VLSFO or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.
Overall floating storage inventories for residual fuel in the Malacca Strait climbed to a four-week high of 2.38 million tonnes in the week ended Jan. 19, according to data intelligence firm Kpler.
The floating inventories were up by 125,000 tonnes, or 6%, from the previous week, Kpler data showed.
Floating VLSFO inventories climbed to 1.66 million tonnes in the week to Jan. 19, up by 11%, or 164,000 tonnes, from the previous week. Floating stocks of HSFO rose by 132,000 tonnes, or 35%, to 510,000 tonnes while stocks of residual fuels with unspecified sulphur content fell 45%, or 171,000 tonnes, to 213,000 tonnes. Singapore onshore inventories fell to a two-week low of 21.2 million barrels, or 3.34 million tonnes, in the week to Jan. 19, slipping 5% from a near two-month high in the previous week as net import volumes shrank.
Japan’s biggest oil refiner, Eneos Holdings Inc, expects to keep its refinery run rate at between 70% and 80% for a while as fuel demand remains on a recovery trend, its chairman said on Monday.
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