SINGAPORE: Asia’s cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) rose for a fourth consecutive session on Friday, to touch a more than two-year high, on steady demand as supplies were largely tight.
Cash premiums for Asia’s 0.5% VLSFO jumped to $24.30 a tonne to Singapore quotes, a level last seen in early-February 2020. They were at a premium of $23.48 per barrel on Thursday.
At the start of 2020, the International Maritime Organization (IMO) banned ships from using fuels with sulphur content above 0.5%, compared with a limit of 3.5% earlier, unless they were equipped with sulphur-cleaning devices called “scrubbers”, making VLSFO a compliant fuel of choice.
The front-month time spread for VLSFO widened its backwardated structure by $1 on Friday to trade at $28 per barrel.
The front-month VLSFO crack rose to $23.52 per barrel against Dubai crude during Asian trade on Friday, 24 cents higher from Thursday. The crack, however, has shed 20.7% this week, Refinitiv data showed.
Asia’s cash premiums for 380-cst high sulphur fuel oil (HSFO) were at $4.57 per tonne to Singapore quotes on Friday, compared with $4.36 per tonne a day earlier.
Fuel oil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub slipped 0.8% to 1.03 million tonnes in the week to March 17, data from Dutch consultancy Insights Global showed. The data showed ARA gasoil inventories dropped 2.1% to 1.6 million tonnes.
No high-sulphur fuel oil (HSFO) deals, no VLSFO trades. Oil prices extended their gains on Friday at the end of a third volatile week of trade after slim progress in peace talks between Russia and Ukraine raised the spectre of tighter sanctions and a prolonged disruption to oil supply.
China’s retail gasoline prices have been hiked to levels not seen since at least 2006 while diesel prices were increased to a decade-high after global oil benchmarks surged in the wake of Russia’s invasion of Ukraine.