SINGAPORE: The cash premium for Asia’s very low sulphur fuel oil (VLSFO) market surged to a fresh high on Thursday as prompt supply held tight, while downstream bunkering demand is expected to be steady for the month.
The 0.5% VLSFO cash differential rose to a premium of $86.23 per tonne to Singapore quotes, extending further to a fresh all-time high from the previous day.
Downstream bunker demand improved slightly in July so far versus last month, according to Singapore-based bunker fuel traders.
However, some sellers were offering aggressively on Thursday as more buying inquiries emerged amid a decline in upstream crude prices. This has led to lagging recovery in VLSFO bunker fuel premiums, despite the strong uptick in cargo cash differentials, a bunker fuel trader said.
India’s Reliance has sold 40,000 tonnes of carbon black feedstock to Vitol, for loading between August 17 and 18. The tender closed last week. Sri Lanka’s Ceypetco has re-issued a purchase tender for 35,000 tonnes of 180-cst HSFO, to be delivered during August 30-31. The tender is slated to close on July 26 with three-day validity.
Singapore fuel oil inventories fell 3% to a two-week low of 20.821 million barrels in the week to July 13, latest data from Enterprise Singapore showed.
Oil prices were little changed on Thursday as investors weighed tight supplies against the prospect of a large US rate hike that would stem inflation and curb crude demand.
US crude oil and fuel stockpiles rose last week, bolstered by another big release from strategic reserves, while demand slackened, the Energy Information Administration said on Wednesday.
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