SINGAPORE: The very low sulphur fuel oil (VLSFO) market in Asia extended a decline into the new trading week as prospects for more supply for August weighed on cash premiums, while high sulphur fuel oil (HSFO) was steady on limited trade.
The 0.5% VLSFO cash differential
Amid an easing backwardated market, more arbitrage supplies are likely to arrive in Asia from the West, while supply within Asia also picked up on more regional tenders.
Meanwhile, the HSFO market was steady on Monday amid limited cargo trade, following a rebound into slight premiums in the previous week.
The 380-cst HSFO cash differential
Contrasting trends for the VLSFO and HSFO grades have narrowed the HiLo spread in recent trading sessions, which is the price difference between front-month 0.5% VLSFO and 380-cst HSFO swaps.
Oil prices were relatively steady on Monday as the market balanced supply fears with expectations that rise in US interest rates would weaken fuel demand.
A sudden crash in global gasoline prices in the past two weeks has dented refiners’ profits, pushing up inventories in key trading hubs around the world while looming exports from China and India also add to pressure on growing stockpiles.
India refiners’ crude processing remained resilient in June, holding above pre-pandemic levels amid steady demand, while production eased with the increased availability of cheaper Russian crude, government data showed.