SINGAPORE: Cash premiums for Asia’s very low sulphur fuel oil (VLSFO) held relatively steady as of Wednesday as supply tightness into July continued to limit recent price declines.
The 0.5% VLSFO premiums were at $59.85 per tonne to Singapore quotes on Wednesday, versus $58.96 per tonne on Tuesday. The premiums have been hovering around $60 per tonne since last week.
“For low sulphur fuel oil, the market is signalling continued tightness for July fundamentals on tighter sulphur cutter for the blending pool,” Refinitiv Oil Research analysts said in a note this week.
The analysts added summer demand for transport fuel in Europe from June until August will potentially erode supply to Asia, providing upward and positive impetus for the global fuel oil structure as refiners maximize summer refined fuels at the expense of fuel oil.
Fuel oil inventories at Fujairah fell to a 17-week low in the week ended June 13, as the Middle East enters peak summer demand for power utilities.
Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues fell 22% from the previous week to 8.10 million barrels (1.28 million tonnes) in the week ended June 13, data via S&P Global Commodity Insights showed.
Oil prices fell on Wednesday on concerns about fuel demand and global economic growth before an expected big hike in interest rates by the US Federal Reserve.
World oil demand will rise more than 2% to a record high of 101.6 million barrels per day (bpd) in 2023, the International Energy Agency said on Wednesday, although sky-high oil prices and weakening economic forecasts dimmed the future outlook.
China’s refinery throughput in May fell 10.9% from the same month a year earlier in the steepest year-on-year drop in at least a decade, data showed on Wednesday, as strict COVID-19 lockdowns slammed fuel demand.
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