SINGAPORE: Cash premiums for very low sulphur fuel oil (VLSFO) in Asia rose more than 10% since the start of the month, despite signs of a weakening gasoil market.
A shortage in gasoil and distillate components for the fuel oil blending pool have kept the VLSFO market tight in recent months, buoying cash premiums to record highs.
The 0.5% VLSFO cash differential fell $2.85 to a premium of $83.38 per tonne to Singapore quotes on Friday, retreating from a record high hit the previous day but still remaining well above last month’s average value of $70 per tonne.
However, fuel oil traders said a downward price correction is possible, as more arbitrage supplies are expected to arrive from the second half of July into August.
Meanwhile, high sulphur fuel oil (HSFO) was steady in discounts this week as supplies remained ample to meet demand.
The 380-cst HSFO cash differential was stable day-on-day at a discount of $2.33 per tonne to Singapore quotes on Friday.
Pakistan State Oil (PSO) bought two 65,000-tonne 180-cst HSFO cargoes for delivery in the first half of August, at premiums of $77 and $78 per tonne over Arab Gulf quotes, market sources said.
PSO had earlier sought for three HSFO cargoes and two LSFO cargoes for this tender. It received three HSFO offers and one LSFO offer from Coral Energy, a document on PSO’s website showed.