SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) kicked off the year on a weaker note but the outlook remained supportive as supply struggles to keep up with firm demand, trade sources said.

VLSFO cash premiums slipped to a 1-1/2 month low of $13.84 a barrel on Monday amid weaker cargo deal values. Meanwhile, the front-month crack, which rolled into February since the previous trading session, fell to a one-month low of $13.47 a barrel above Dubai crude as oil prices firmed. The lower crack also came as crude oil rose towards $79 a barrel on Monday, supported by tight supply and hopes of further demand recovery in 2022, spurred in part by a view that the Omicron coronavirus variant is unlikely to dampen the outlook significantly.

Two 0.5% VLSFO and one 180-cst high-sulphur fuel oil (HSFO) cargo trades were reported in the window, totalling 60,000 tonnes.

The next meeting of OPEC+ is expected to decide to go ahead with a planned 400,000 barrel per day (bpd) oil production increase in February, three sources from the producer group told Reuters on Monday.

OPEC+ expects the impact on the oil market from the Omicron variant to be mild and temporary, keeping the door open for a further increase in output, a technical report seen by Reuters showed on Sunday.