SINGAPORE: Cash premiums in Asia’s very low sulphur fuel oil (VLSFO) rose on Friday on the back of tight supply and steady demand from the bunkering sector.

0.5% VLSFO differentials were at premiums of $64.34 per tonne to Singapore quotes on Friday, edging higher from $60.98 per tonne on Thursday and holding steady near this month’s average value of $65.95 per tonne. Refining margins for 0.5% VLSFO continued to lag behind that of 10-ppm gasoil, which continued to rally towards an all-time high during Asia trade on Friday.

This trend is likely to result in continued tightness in blending components allocated for the fuel oil market as refiners capitalise on higher middle distillate margins. Meanwhile, arbitrage inflows from the West also remains capped. Meanwhile, 180-cst high sulphur fuel oil (HSFO) cash differentials had a short-lived recovery into premiums before sinking back into discounts by the end of the week, with sellers lowering offers to entice more buying interest.

380 cst-HSFO differentials held steady in premiums for the fourth day, with downstream ex-wharf bunker premiums also demonstrating a slight recovery this week. Fuel oil stocks in the ARA refining and storage rose 6% to 1.27 million tonnes in the week ended June 16, latest data from Dutch consultancy Insights Global showed.

Oil prices were lower in Asia’s trading hours on Friday as demand concerns emerged following this week’s rate hikes, although persisting supply tightness and new sanctions on Iran limited the downside.

Sales of marine fuel at Fujairah, the third largest bunkering hub in the world, rose 12% month-on-month in May to a seven-month high, official data showed this week.