SINGAPORE: Asia’s front-month 0.5% very low-sulphur fuel oil (VLSFO) time spread and crack against Dubai crude firmed on Monday as some market participants rolled their positions ahead of the June contracts’ expiry, trade sources said.
The July/August VLSFO spread climbed to a one-month high of 75 cents a tonne while the July crack firmed to a three-week high of $12.07 a barrel above Dubai crude, Refinitiv data in Eikon showed.
By contrast, in the physical markets, VLSFO cash differentials dropped to a more than two-week low of minus 90 cents a tonne to Singapore quotes on sluggish spot demand and plentiful supplies.
Crude oil prices slipped on Monday after hitting more than 2-1/2 year highs earlier in the session, as a spike in COVID-19 cases in Asia put a brake on rally before this week’s OPEC+ meeting.
Trafigura bought a 20,000 tonne cargo of 180-cst high-sulphur fuel oil (HSFO) from PetroChina. No VLSFO cargo trades were reported.
India’s MRPL has sold 30,000 tonnes of VLSFO with a maximum 0.5% sulphur content loading over July 3-5 from New Mangalore to Shell at a $3-$4 per tonne premium to the average of Singapore Platts and Argus quotes for VLSFO on an FOB basis, trade sources said.
The premium paid for the MRPL cargo was seen as strong given that VLSFO cargoes in Singapore have traded at a discount throughout June while front-month time spreads were trading at either side of parity.
Overall floating storage inventories in the Malacca Strait fell 5% in the week ended June 23 despite VLSFO supplies climbing to six-month highs, according to data intelligence firm Kpler.
Total floating storage inventories fell by 176,000 tonnes to a two-week low of 3.28 million tonnes, the data showed.
This came despite a rise in floating inventories of IMO-compliant VLSFO which jumped 20% in the week to June 23 to 2.46 million tonnes, the highest since mid-December, the Kpler data showed.
Stocks of HSFO dropped 57% from the previous week to 203,000 tonnes while stocks of residual fuels with unspecified sulphur contents dropped 11% to 559,000 tonnes, the data showed.
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