SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash discount narrowed on Monday amid firmer bids submitted in the Singapore window.

But deal activity for fuel oil cargoes in the Singapore window remained persistently absent, helping keep the monthly traded volume for May at the lowest in 5-1/2 years, data compiled by Reuters showed.

Firmer bids by Mercuria helped lift the VLSFO cash discount to minus $2.69 a tonne to Singapore quotes on Monday, up by 6 cents from the previous session and further away from a nine-month low of minus $3 a tonne on May 25.

Ample supplies, rising inventories and sluggish spot bunker demand have hammered Asia’s residual fuel market complex in recent weeks.

Steady arbitrage flows in June, rising refinery output in South Korea and ample supplies in China are expected to continue to weigh on the fuel oil market sentiment, trade sources said.

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

Overall residual fuel trading volumes in the window have fallen sharply in May to the lowest monthly volumes since at least the start of 2016, or as far as available records go, at just 200,000 tonnes.

This compares with a total of 320,000 tonnes traded in May last year and an average monthly traded volume of 616,000 tonnes in 2020.