SINGAPORE: Asia’s front-month 0.5percent very low-sulphur fuel oil (VLSFO) crack fell on Wednesday, retreating from a three-month high hit in the previous session on ample supplies and rising crude prices.
The front-month crack fell to $12.95 a barrel above Dubai crude, from $13.33 a barrel on Tuesday, Refinitiv data in Eikon showed. Oil prices climbed more than $1 on Wednesday, extending overnight gains after industry data showed US crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves.
Fuel oil inventories in the Fujairah bunkering and storage hub dropped 7percent to a near three-year low in the week ended Sept. 20, data released on Wednesday showed.
The drawdown in fuel oil stocks came amid limited high-sulphur fuel oil (HSFO) supplies, firm regional utility demand and steep backwardation in the market structure, trade sources said.
Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 491,000 barrels, or about 77,000 tonnes, to 6.98 million barrels, or 1.1 million tonnes, data via S&P Global Platts showed.
Fujairah’s fuel oil inventories were 31percent lower than year-ago levels.
According to assessments by Refinitiv Oil Research, exports from the UAE dropped to 245,000 tonnes in the week ended Sept. 19, down from 527,000 tonnes from the prior week.
“Parabolic gas prices are providing sustained support for fuel oil sales as utilities companies switch to oil where possible,” Refinitiv Oil Research said.
Kuwait fuel oil imports remained strong with 240,000 tonnes imported in the week to Sept. 19 using three tankers, two chartered by Vitol and one by Gunvor, according to Refinitiv Oil Research.
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