SINGAPORE: Residual stock levels at Singapore fell to their lowest in more than three years, latest data showed on Thursday, as steady downstream demand led to a consistent drawdown in recent weeks.

Recent declines in premiums of very low sulphur fuel oil (VLSFO) have lifted prospects of bunker demand in August, some trade sources said.

The 0.5% VLSFO cash differential inched up slightly on Thursday as market backwardation widened day-on-day, but continued to hover way below record highs of above $86 seen in July. The cash premium rose $1.61 to $16.56 per tonne over Singapore quotes on Thursday.

High sulphur fuel oil (HSFO) demand for power generation is also expected to hold steady in the month, particularly for South Asia, which could prompt more fuel oil stock draws regionally.

The 180-cst HSFO cash differential in Asia rose 75 cents to a premium of $1.91 per tonne over Singapore quotes, while the 380-cst HSFO cash differential climbed 93 cents to a premium of $7.59 per tonne.

Singapore fuel oil inventories fell 5% to 17.08 million barrels (2.69 million tonnes) in the week to Aug. 10, latest data from Enterprise Singapore showed.

Oil prices drifted lower on Thursday as concerns over supply disruptions eased and markets looked for evidence of improving fuel demand.

Major energy traders are taking hundreds of millions of dollars in losses as they scramble to plug a liquefied natural gas supply gap after several outages hampered efforts to fill European storage ahead of the winter heating season.

The average price of US retail gasoline fell below $4 per gallon on Thursday for the first time in months, giving some relief to drivers in the world’s largest consumer of the fuel.