Asia Fuel Oil: Cash differentials steady on limited trading activity

SINGAPORE: Cash differentials in Asia’s fuel oil market kicked off Monday on a steady note amid limited trading activity, while supply-demand fundamentals were little changed for the near term.

Steady tightness in blending components was expected to keep the very low sulphur fuel oil (VLSFO) grade tight this month, though slightly more arbitrage inflows could cap prices.

The 0.5% VLSFO cash differential rose $1.54 to a premium of $84.92 per tonne to Singapore quotes on Monday.

Meanwhile, discounts in the high sulphur fuel oil (HSFO) market narrowed slightly in recent trading sessions as summer power generation demand continued to hold in the Middle East.

Nonetheless, prospects of more Russian supply flowing into the Middle East and Asia capped further price recovery, market sources said.

The 380-cst HSFO cash differential rose 25 cents to a discount of $2.08 per tonne to Singapore quotes on Monday. Oil prices extended gains on Monday, propped up by a weaker dollar and tight supplies that offset concerns about recession and the prospect of widespread COVID-19 lockdowns in China again reducing fuel demand.

China’s June gasoline exports halved from a year earlier, driving overseas sales for the first six months of 2022 down 42%, as the country sticks with its policy of curbing fuel exports despite stalling domestic demand, Chinese customs data showed on Monday.