SINGAPORE: Despite thin trade liquidity, Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front-month crack hit a fresh two-year high on Thursday amid persistent concerns of tight supply.
The front-month crack climbed to $18.89 a barrel above Dubai crude, up from $15.92 in the previous session and its highest since Feb. 12, 2020, Refinitiv Eikon data showed.
Illustrating the tight supply, the front-month VLSFO time spread also climbed to a more than one-month high of $20.25 a tonne on Thursday, up from $13 a tonne on the previous session, the data showed. Singapore residual fuel oil inventories fell in the week ended Feb. 2, slipping 3% from a near five-month high in the previous week as net import volumes dropped, official data showed on Thursday.
Onshore fuel oil stocks fell by 697,000 barrels, or about 110,000 tonnes, to a two-week low of 23.09 million barrels, or 3.64 million tonnes, in the week ended Wednesday, Enterprise Singapore data showed.
Still, weekly residual fuel inventories in Singapore were 8% above year-ago levels and were above the 2021 weekly average of 22.48 million barrels.
This came as Singapore fuel oil net imports dropped to a five-week low of 239,000 tonnes in the week to Feb. 2, down 82% from the near one-and-a-half year high of 1.3 million tonnes in the previous week. Weekly figures, however, are volatile.
Weekly fuel oil net imports averaged 721,000 tonnes so far this year.
In the Fujairah hub, fuel oil stockpiles surged 16% to a two-month high of 11.38 million barrels, or 1.79 million tonnes, in the week to Jan. 31.
Fuel oil flows into East Asia, most of which come to Singapore, closed at 6 million tonnes in January, higher from December’s inflows of 4.7 million tonnes, the latest assessments by Refinitiv Oil Research showed.
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