SINGAPORE: Cash premiums in Asia’s very low sulphur fuel oil (VLSFO) market climbed 25% from the previous week, supported by steady downstream bunker fuel demand and limited supplies for prompt loading dates. 0.5% VLSFO cash differentials extended gains for an eighth consecutive day, hitting $78.70 per tonne over Singapore quotes on Friday and nearing the previous record high of $79.23 per tonne on June 2.

Robust 10-ppm gasoil refining margins have kept distillate components tight for the fuel oil blending pool, in turn limiting prompt supplies.

Meanwhile, demand for low-sulphur bunker fuel also boosted sentiment. Delivered 0.5% VLSFO bunker premiums were at about $100 per tonne this week, approaching a new all-time high, according to bunker fuel traders.

In contrast, demand for high sulphur fuel oil (HSFO) remained tepid in the week. Cash differentials for HSFO remained stuck in discounts, as ample supplies flowing into Asia capped recovery.

ARA INVENTORIES

Fuel oil stocks in the ARA refining and storage inched lower 1% to 1.26 million tonnes in the week ended June 23, latest data from Dutch consultancy Insights Global showed.

Oil rose by more than $1 a barrel on Friday supported by tight supply, although crude was heading for a second weekly fall on concern that rising interest rates could push the world economy into recession. - OPEC and allied producing countries including Russia will likely stick to a plan for accelerated oil output increases in August, sources said, hoping to ease surging oil prices and inflation pressure as US President Joe Biden plans to visit Saudi Arabia and the Middle East.