SINGAPORE: Asia’s cash premiums for fuel oil extended gains on Monday as supply remains tight, with differentials for 0.5% very low-sulphur fuel oil (VLSFO) scaling new highs for a second straight session.

The cash premiums for Asia’s 0.5% VLSFO were at $43.66 a tonne to Singapore quotes, extending to a new record high, according to Reuters data which goes back to late 2019.

The outlook for arbitrage supplies into Asia is expected to stay tight into May and June, as European refiners exported less fuel oil and kept more barrels for domestic use, amid a shortfall in Russian supplies following the Ukraine conflict.

High-sulphur fuel oil (HSFO) cash differentials continued to extend a slight rebound from late last week in view of stronger seasonal demand from south Asia into summer, although prospects of more incoming HSFO barrels capped gains.

Cash differentials for 180-cst HSFO climbed to a discount of 51 cents per tonne to Singapore quotes on Monday, narrowing versus a discount of $1.79 per tonne last Friday. Meanwhile, cash differentials for 380-cst HSFO rose to $5.30 per tonne to Singapore quotes, compared with $4.88 per tonne last Friday.

Oil prices gained on Monday with US fuel demand, tight supply and a slightly weaker US dollar supporting the market, as Shanghai prepares to reopen after a two-month lockdown that fuelled worries about a sharp slowdown in growth.

Japan’s top oil refiner Eneos Holdings Inc has received higher requests from local utilities for fuel oil to be used in oil-fired power plants for April-September, but it will be able to meet only a part of the request, its chairman said.

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