SINGAPORE: Asia’s high-sulphur fuel oil (HSFO) firmed on Monday amid tight supply and firm demand from both utilities and refiners.
“Scorching temperatures in the Middle East are supporting HSFO demand seasonally, while Asian time spreads have tightened further as hot weather and expensive spot LNG are combining to support regional utilities’ demand,” said Energy Aspects in a note to clients on Monday.
The front-month 180-cst HSFO time spread hit a more than one-and-a-half-year high of $5.50 a tonne on Monday, Refinitiv data in Eikon showed, after Pakistan’s PSO recently issued several tenders seeking fuel oil imports in August through to October.
“Beyond a breakdown of the OPEC+ supply agreement, there is little that can ease the strength in fuel oil markets at present,” said Energy Aspects.
Cash premiums, the front-month time spread and crack of Asia’s 0.5% very low-sulphur fuel oil (VLSFO) all firmed to near two-week highs amid a relatively tight supply outlook that is expected to last throughout August, trade sources said.
Shell bought three VLSFO cargoes from Gunvor in the Singapore window totalling 60,000 tonnes.
Monday’s VLSFO deal volume was the highest in over a month.
No HSFO cargo trades were reported. The United States and Britain said on Sunday they believed Iran carried out an attack on an Israeli-managed petroleum product tanker off the coast of Oman on Thursday that killed a Briton and a Romanian, both pledging to work with partners to respond.
China’s factory activity expanded in July at the slowest pace in 17 months as higher raw material costs, equipment maintenance and extreme weather weighed on business activity, adding to concerns about a slowdown in the world’s second-biggest economy.
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