SINGAPORE: Asia’s very low sulphur fuel oil (VLSFO) market remained firm amid persisting tightness in gasoil components being channeled to the fuel oil blending pool.

Cash premiums for 0.5% VLSFO continued to inch towards record highs touched earlier this month, with premiums at $77.16 per tonne to Singapore quotes on Wednesday, versus $75.19 per tonne on Tuesday.

While refining margins for 10-ppm gasoil retreated slightly on Wednesday after hitting fresh record highs the previous day, gasoil supply tightness capped further downside. Stronger middle distillate margins have led to tightening supply of VLSFO and its blending components since the start of this year.

In contrast, the high sulphur fuel oil (HSFO) market continued to be underpinned by ample supply inflows, which capped recovery in cash differentials.

Meanwhile, 380-cst HSFO differentials were at premiums of $1.04 per tonne to Singapore quotes on Wednesday, sliding from premiums of $1.60 per tonne on Monday.

Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues rebounded 26% from the previous week to 10.20 million barrels (1.61 million tonnes) in the week ended June 20, latest data via S&P Global Commodity Insights showed.

Oil prices skidded more than $6 a barrel on Wednesday amid a push by US President Joe Biden to bring down soaring fuel costs, including pressure on the country’s major energy firms to help ease the pain for drivers during peak summer consumption. ExxonMobil will be upgrading its residual production into higher-value lubricant base stocks and cleaner fuels as part of its Singapore Resid Upgrade Project, the company said on Wednesday.