SINGAPORE: Asia’s very low sulphur fuel oil (VLSFO) market recovered for a second consecutive session on Tuesday as stronger bids emerged for May-loading cargoes.
The spot 0.5% VLSFO premium edged higher at $2.47 a tonne, while the front-month crack climbed to $8.91 a barrel at the Asia close (0830 GMT).
Despite VLSFO’s slight recovery, the hi-5 fuel oil spread remains narrow. The spread, which is the price difference between 0.5% VLSFO and 380-cst high sulphur fuel oil (HSFO), crunched further to $122.75 a tonne on Tuesday, holding at 18-month lows.
The outlook for HSFO remains upbeat for the second quarter, with seasonal demand expected to ramp up in the Middle East which typically leads to less exports to Asia.
Singapore’s spot 380-cst HSFO premium rose to $7.64 a tonne on Tuesday, while the front-month crack climbed to a discount of $10.42 a barrel at the Asia close.
In tenders, Saudi Aramco had offered more vacuum gasoil (VGO) for loading out of Jizan, based on ship-broking records. The latest cargo is expected to load between April 21 and 23, on top of a previous one for mid-April loading. Saudi’s VGO offers are expected to decline once its Jizan refinery ramps up further into Q2, sources said.
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in US crude stockpiles.
Kazakhstan and Azerbaijan are in talks to set up a joint venture that would handle all shipments of Kazakh crude through Azeri territory as Astana diverts more oil to the Caucasus from Russia, Kazakh Deputy Prime Minister Serik Zhumangarin said on Tuesday.
India’s fuel consumption jumped to a record high in March, data showed, fuelled by robust economic activity in the world’s third biggest oil consumer.
Russia started fuel exports to Iran via rail this year for the first time to diversify its oil products supplies after traditional buyers shunned the trade with Moscow, according to three industry sources and exports data.
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