SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) extended losses on Tuesday, hammered by plentiful supplies as well as weak bunkering and utility demand, trade sources said. The VLSFO cash differential fell to its lowest level in nine-and-a-half months at minus $2.83 a tonne to Singapore quotes on Tuesday, down from minus $2.55 a tonne on Monday and a 35 cent premium at the start of the month.

The VLSFO cash differential was dragged lower as Shell continued to lower its offers for cargoes of the fuel in the Singapore window but failed to attract buyers.

The VLSFO complex was also battered in the paper market, with the front-month time-spread sinking to a 10-month low of minus $3.25 a tonne, while the front-month crack against Dubai crude dropped to a five-month low of $9.63 a barrel.

Despite the weak demand induced losses, trade sources said the widening contango structure provided some form relief as it helped offset storage costs.

China’s fuel oil output in April fell 13% compared to last year at 2.88 million tonnes, data from the statistics bureau showed on Tuesday.

No VLSFO or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.

Please click on for more details. Oil rose on Tuesday to hit $70 a barrel for the first time since March, as expectations of demand recovery following the reopenings of the European and US economies offset concern over spreading coronavirus cases in Asia.