VLSFO cash premiums rise, crack hits 2-week high

15 May, 2022

SINGAPORE: Asia’s cash premiums for 0.5% very low-sulphur fuel oil (VLSFO) climbed on Friday, riding on firmer deals in the physical market, but posted their biggest weekly decline since late January.

Cash differentials for Asia’s 0.5% VLSFO rose to a premium of $19.59 a tonne to Singapore quotes, up from $18.10 per tonne on Thursday. The premiums, however, have shed about 25% this week. The front-month VLSFO crack rose to a two-week high of $22.76 per barrel against Dubai crude during Asian trading hours, buoyed by expectations for tight regional supplies in the near term.

The crack was at $21.72 per barrel on Thursday, and has gained about 5% this week, Refinitiv Eikon data showed.

Cash premiums for 380-cst high sulphur fuel oil (HSFO) dipped to a premium of $6.01 per tonne to Singapore quotes, while cash differentials for 180-cst HSFO fell to a premium of $14.98 per tonne to Singapore quotes.

The front-month barge crack for 380-cst HSFO traded at a discount of $14.38 a barrel to Brent on Friday, compared with minus $13.77 a barrel in the previous session.

Fuel oil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped 4.6% to 1.03 million tonnes in the week ended May 12, data from Dutch consultancy Insights Global showed.

This comes after Singapore’s onshore fuel oil stocks fell 15% to 17.5 million barrels, or about 2.6 million tonnes, in the week ended May 11, the lowest level since July 2019, according to the Enterprise Singapore data.

ARA gasoil stocks rose 0.8% to 1.6 million tonnes this week.

One 180-cst high-sulphur fuel oil (HSFO) deal, no 380-cst HSFO trades. Two VLSFO trades were reported. OPEC cut its growth forecast for world oil demand in 2022 for a second straight month, citing the impact of Russia’s invasion of Ukraine, rapid inflation and the resurgence of the Omicron coronavirus variant in China. Oil prices rose around 1.5% on Friday, but were headed for their first weekly loss in three weeks as worries about inflation and China’s COVID lockdowns slowing global growth offset concerns about dwindling fuel supplies from Russia.

Read Comments