Asia fuel oil: Competitive selling interest weighs further on VLSFO market

SINGAPORE: Asia’s fuel oil market weakened further on Thursday as competitive selling interest persisted, while inventories at key trading hub Singapore hit a 19-week high.

The cash differential for 0.5% very low sulphur fuel oil (VLSFO) fell $2.56 to a premium of $1.41 per tonne, sliding to its lowest since October 2021.

There was room for VLSFO differentials to trend into discounts, fuel oil traders said, as the market continues to be underpinned by abundant supplies and determined sellers.

Meanwhile, differentials for high sulphur fuel oil (HSFO) hovered sideways in single-digit premiums over Singapore quotes.

The 380-cst HSFO cash differential dipped $1.32 to a premium of $2.43 per tonne on Thursday, while the 180-cst HSFO cash differential rose $1.42 to a premium of $4.93 per tonne.

Singapore fuel oil inventories rose 7% to 22.67 million barrels (3.57 million tonnes) in the week to Aug. 31, hitting a 19-week high, latest data from Enterprise Singapore showed.

Oil prices fell in early Asian trade on Thursday, led lower by increased supply and worries that the global economy could slow further with renewed restrictions to curb COVID-19 in China.

Tug boats refloated an oil tanker, Affinity V, that was briefly stranded in Egypt’s Suez Canal late on Wednesday due to a technical fault with its rudder, the Suez Canal Authority (SCA) said.

A bulk carrier that collided with an LNG tanker off Gibraltar started leaking fuel oil, authorities in the British overseas territory on the southern tip of the Iberian peninsula said on Wednesday.