SINGAPORE: Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) surged for a second consecutive session on Thursday to hit a fresh high in more than two years.
The front-month VLSFO crack jumped to $29.39 per barrel against Dubai crude during Asian trading hours, the highest since January 2020. The crack was at $24.67 per barrel a day earlier.
The VLSFO markets across the globe are currently tight in supplies, while strongly recovering industrial and transportation demand is preventing gasoil barrels to get into the bunker blending pool, market watchers said.
Asian refining margins for 10 ppm gasoil soared to their highest level on record on Thursday, despite soaring feedstock crude oil prices.
“While demand for lower-sulphur fuel oils eases (as Northeast Asian winter demand subsides and bunkering demand slows due to higher prices), the fight for yields will keep VLSFO supported in 2022,” consultancy Energy Aspects wrote in a note.
Cash differentials for Asia’s 0.5% VLSFO were at a premium of $17.12 a tonne to Singapore quotes on Friday, compared with $19.91 per tonne a day earlier.
Meanwhile, Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) rose to $3.25 per tonne to Singapore quotes on Thursday, riding on two firmer deals in the physical trade window. They were at a premium of $1.30 per tonne in the previous session.
Oil tanker rates are soaring globally as traders scramble to cope with jitters over possible disruption in Russian supplies, as well as war risk premiums for ships plying the Mediterranean region following Moscow’s invasion of Ukraine.
Singapore’s onshore fuel oil stocks inched up 1.7% to 21.7 million barrels, or 3.2 million tonnes, in the week to March 2, according to the Enterprise Singapore data.
Weekly fuel oil inventories have averaged 22.3 million barrels so far this year, compared with the weekly average of 22.5 million barrels in 2021, Reuters calculations showed. Onshore fuel oil inventories were 0.7% lower compared with year-ago levels.
Two 380-cst high-sulphur fuel oil (HSFO) deals, no 180-cst HSFO trades. One VLSFO trade was reported.
US sanctions targeting Russian refineries, disruptions to shipping and a fall in US crude stocks to multi-year lows kept oil prices racing on Thursday as Brent charged towards $120 a barrel, its highest in almost a decade.
The United States on Wednesday took aim at Russia’s oil refining sector with new export curbs and targeted Belarus with sweeping new export restrictions, as the Biden administration amps up its crackdown on Moscow and Minsk over the invasion of Ukraine.
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