SINGAPORE: Cash premiums in Asia’s 0.5% very low sulphur fuel oil (VLSFO) market eased for a second consecutive trading session on Monday after hitting an all-time high last week.

The 0.5% VLSFO premiums fell to $62.00 per tonne to Singapore quotes on Monday, compared with $75.16 per tonne on Friday. The premiums were at record highs of $79.23 per tonne on Thursday.

The uptrend has started to show signs of fizzling out, with some fuel oil and bunker fuel traders saying that the extravagant premiums were not sustainable as they will dampen demand.

However, price declines are expected to be capped as 10 ppm gasoil margins retained strength, which could in turn propel less gasoil barrels into the fuel oil blending pool and result in less gasoil available for VLSFO blending.

Refining margins for 10 ppm gasoil and jet fuel hit new highs in Asian trading hours on Monday, according to Refinitiv Eikon data.

Meanwhile, high sulphur fuel oil (HSFO) differentials continued to trend steady-to-softer amid expectations of steady supply inflows into June.

Cash differentials for 380cst-HSFO fell to discounts of 61 cents per tonne to Singapore quotes on Monday, compared with premiums of 26 cents per tonne on Friday.

Oil prices hit $120 a barrel on Monday after Saudi Arabia raised crude prices for July and amid doubts that an increased OPEC+ monthly output target will help ease tight supply.

Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium, the highest since May, when prices hit all-time highs due to worries of disruption in supplies from Russia.