SINGAPORE: Asia’s front-month crack for 0.5% very low-sulphur fuel oil (VLSFO) slipped on Wednesday, but traders said steady bunkering demand and limited arbitrage arrivals from the West would support the market in the near term.
The front-month VLSFO crack dipped to $13.05 per barrel against Dubai crude during Asian trading hours, compared with $13.47 per barrel on Tuesday.
“While bunker demand in Singapore is largely expected to stay supported into the year-end, some ship owners may hold back from massive purchases due to expensive premiums for prompt dates and rising flat prices for crude,” according to Refinitiv Oil Research assessments.
Cash premiums for Asia’s 0.5% VLSFO, which have risen 31% in the last two weeks, were at $16.24 a tonne to Singapore quotes on Wednesday. They were at $17.90 per tonne a day earlier.
Meanwhile, Asia’s cash discounts for 380-cst high sulphur fuel oil (HSFO) narrowed to $1 per tonne to Singapore quotes, compared with Tuesday’s discount of $1.33 per tonne.
The 380-cst HSFO barge crack for January fell to a discount of $12.80 a barrel to Brent, compared with minus $12.64 per barrel on Tuesday, Refinitiv Eikon data showed.
Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues plunged 24.2%, or 2.9 million barrels (about 431,000 tonnes), from the previous week to 9.03 million barrels (1.3 million tonnes), data via S&P Global Platts showed.
Compared with year-ago levels, the weekly fuel oil inventories at FOIZ were about 12% lower.
Fuel oil stocks at FOIZ have averaged 10.3 million barrels so far this year, compared with a weekly average of 12.9 million barrels in 2020, Reuters calculations showed.
China’s Shandong province, the country’s main independent oil refining hub, has turned to a deep-pocketed state-run coal miner to help fund a petrochemical complex it sees as key to the region’s industrial future, sources and local state media said.
Shandong Energy Group, a provincial government-backed coal producer and utility operator, is set to take a 46.1% stake in the $20 billion Yulong Petrochemical plant, becoming the second-largest stakeholder in the project led by privately run aluminium smelter Nanshan Group, three sources said.
Vitol bought a 20,000-tonne cargo of 180-cst HSFO from Alvari at a discount $1 per tonne to Singapore quotes. No VLSFO trades were reported on Wednesday.
Australia’s Woodside Petroleum Ltd plans to invest $5 billion by 2030 mainly in hydrogen, in line with a global push for cleaner energy, armed with cash flow from its planned merger with BHP Group’s petroleum arm.