SINGAPORE: Asia’s refining cracks for very low sulphur fuel oil (VLSFO) touched a new high on Wednesday, buoyed by expectations of limited supply into July, while cracks for high sulphur fuel oil stagnated in a steady range from last week amid ample cargo availability.
The front-month 0.5% VLSFO crack rose to a fresh all-time high of $39.06 a barrel to Dubai crude at the Asia close (0830 GMT) on Wednesday, Refinitiv data showed.
West arbitrage inflows to Singapore are likely to remain between 1.5 million tonnes and 2 million tonnes in July, little changed from June, industry sources said.
While monthly inflows are steady, a shortage in blending components due to a tight gasoil market will continue to limit the supply of blended 0.5% VLSFO, they said.
In contrast, high sulphur fuel oil cracks continued to show little recovery as supply was ample amid consistent exports out of the Middle East to Asia.
The front-month 180-CST HSFO crack was at minus $11.25 a barrel to Dubai crude at the Asia close (0830 GMT) on Wednesday, Refinitiv data showed. It averaged minus $9.30 a barrel in June so far, sliding further from minus $3.35 a barrel in May.
Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues climbed 8% from the previous week to 11.05 million barrels (1.74 million tonnes) in the week ended June 27, latest data via S&P Global Commodity Insights showed. The inventories were at a seven-week high.
Oil prices fell on Wednesday after rising in the previous three sessions, but losses were limited on the view that global supply tightness will continue, amid limited room for major producers such as Saudi Arabia to boost production.
China said on Wednesday it will subsidise refiners if global oil prices hit above $130 a barrel, reiterating an existing fuel policy that closely tracks international markets but also with a goal to shield consumers from price shocks.
US authorities have stopped an oil tanker traveling from Russia to New Orleans to check whether the product it was carrying was Russian in origin, a source confirmed to Reuters, and a spokesperson for the company that chartered it said it was not.
The Vitol-chartered vessel was shipping intermediate oil products including vacuum gasoil and fuel oil from Russia’s Taman port to New Orleans last week, according to a trading source and shipping data. Mitsui O.S.K. Lines, Ltd.
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