SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) dropped on Friday, erasing some of this week’s gains, although sentiment was supported by the tight availability of finished-grade supplies.
The front-month VLSFO time spread fell by $2.50 to $15 a tonne on Friday, while the front-month crack slipped to $16.23 a barrel above Dubai crude, down by 52 cents from the previous session, Refinitiv Eikon data showed.
Trade volumes in the paper market, however, were thin, broker sources said. Earlier in the week, front-month backwardation in the VLSFO market hit a near two-week high of $18.25 a tonne, while the crack on Thursday was a near two-week high of $16.75 a barrel.
In the physical market, VLSFO cash premiums also dropped to $11.09 a tonne to Singapore quotes, down from $13.10 in the previous session and $14.10 at the start of the week.
By contrast, 180-cst high-sulphur fuel oil (HSFO) cash differentials jumped to a near three-month high of $2.95 a tonne on Friday, supported by increased buying appetite in the Singapore window.
Meanwhile, residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) and Fujairah storage hubs fell, while those in the Singapore rose, the latest official data showed this week.
Fuel oil stocks in the ARA refining and storage fell by 132,000 tonnes to 1.03 million tonnes in the week ended Jan. 13, data from Dutch consultancy Insights Global (IG) showed.
Fuel oil stocks fell 11% as exports to the Mediterranean increased against a backdrop of low imports.
Compared with last year, the inventories at the ARA hub were 8% lower and below the five-year seasonal average of 1.18 million tonnes.
In the Fujairah hub, fuel oil stockpiles fell 9% to an three-week low of to 9.18 million barrels, or 1.45 million tonnes, as limited output continued to weigh on supplies. (Full Story)
In Singapore, fuel oil inventories climbed to a seven-week high of 22.34 million barrels, or 3.32 million tonnes, pulling further away from a three-month low recorded at end-December.
Three VLSFO cargo trades were reported on Friday totalling 80,000 tonnes along with three HSFO cargo deals totalling 60,000 tonnes.
Sales of marine fuels, known as bunkers, in Singapore climbed to a four-year high in 2021, official data showed, led by higher sales in the first half of the year amid firm global demand for sea-borne freight.
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