VLSFO reverts to downtrend after short-lived strength

SINGAPORE: Asia’s spot cash premium for very low sulphur fuel oil (VLSFO) reverted to a softer trend on Thursday, giving up the previous day’s gains as supplies remain ample.

The spot 0.5% VLSFO cash differential fell to a premium of $14.94 a tonne.

The market had been weakening compared to early February, though declines were capped after a closely watched tender in the market traded higher earlier this week.

Kuwait’s Al Zour had sold 120,000 tonnes of 0.5% VLSFO at a small premium to Singapore quotes, for loading between March 7 and 8, trade sources said. The previous VLSFO tender by Al Zour traded near parity to Singapore quotes.

Some sources said that the price level was firmer than expected, as the wider supply pool was unlikely to tighten into March. Total fuel oil supplies to Asia are estimated at above 5.5 million tonnes in February, higher from January, based on Refinitiv assessments this week.

Onshore fuel oil stocks eased 2% to 20.73 million barrels (3.26 million tonnes) in the week ended Feb. 16, Enterprise Singapore data showed.

The decline came despite an uptick in weekly net imports, which rose by 27% to 645,000 tonnes in the same week. However, weekly net imports averaged lower on a month-on-month basis, at 577,000 tonnes a week in February versus 611,000 tonnes a week in January.

Oil prices rose on Thursday as hopes of a robust fuel demand recovery in China offset losses arising from strength in the greenback and a large build in US crude inventory.

German utility Uniper has agreed to sell its oil refinery in the United Arab Emirates to a consortium of Montfort and the private office of Sheikh Ahmed Dalmook Al Maktoum for an undisclosed sum, it said on Thursday.

A ship operated by Denmark’s Maersk Tankers has been banned from Spanish ports, Spanish officials said, after its cargo of oil products was found to have previously been carried by a vessel that was formerly Russian flagged.

International marine fuels group Baseblue, created through the merger of three bunker players, aims to hone in on green shipping as part of the growing push to decarbonise the industry, executives said this week.