SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) cash differential jumped on Thursday, buoyed by firm demand and limited supplies. The VLSFO cash premium to Singapore quotes reached its highest in nearly two years at $14.97 a tonne, up from $12.39 on Wednesday, as deal values in the Singapore window soared.
The increase was despite a 7% rise in Singapore residual fuel oil inventories in the week ended Nov. 24, climbing to an 11-week high as net import volumes rose, official data showed on Thursday.
Onshore fuel oil stocks rose by 1.55 million barrels, or about 244,000 tonnes, to 22.9 million barrels, or 3.61 million tonnes, Enterprise Singapore data showed. However, residual fuel stocks were 5% lower than a year earlier and below the 2021 weekly average of 22.7 million barrels.
Weekly net imports, meanwhile, were up 16% from the previous week at a four-week high of 678,000 tonnes, on par with the 2021 weekly average of 679,000 tonnes. However, weekly figures are volatile.
The largest net imports were from Algeria at 317,000 tonnes, a record high, followed by Malaysia at 299,000 tonnes, the United Arab Emirates at 158,000 tonnes and Brazil with 103,000 tonnes.
The top net export destinations for Singapore fuel oil were Hong Kong at 134,000 tonnes, followed by China at 57,000 tonnes and Australia at 45,000 tonnes. Exports to Hong Kong were at a five-month high.
Fuel oil flows into East Asia, most of which come to Singapore, were expected at between 5 million and 5.5 million tonnes in November, compared with October’s 6.2 million tonnes, latest assessments by Refinitiv Oil Research showed.
“Regional supply remains tight amid refinery maintenance in North Asia, while western arbitrage supply stays limited as year-end utility demand in Europe capped exports East of Suez,” Refinitiv Oil Research said. Gunvor bought a 20,000 tonne VLSFO cargo from Trafigura at an $18 a tonne premium to Singapore quotes.
A similar VLSFO cargo last traded at a $9 a tonne premium on Nov. 19. No high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.