SINGAPORE: Asia's 180-cst high-sulphur fuel oil (HSFO) cargo cash premium soared to their highest level since the start of 2020, more than doubling from the previous session, as tight supplies and strong demand from utilities propelled the market higher. 180-cst HSFO cash premiums jumped to $20.48 a tonne to Singapore quotes on Friday, up from $9.98 a tonne in the previous session.
This came after Glencore sold a 20,000 tonne 180-cst HSFO cargo to Vitol at a $21 per tonne premium.
Pakistan's PSO on Thursday closed a tender to import fuel oil cargoes in the second half of September. The tender results could not yet be confirmed.
PSO most recently awarded tenders to import 310,000 tonnes of fuel oil for delivery in late-August and early-September.
Kuwait and Bangladesh have also ramped up imports of fuel oil for power generation in recent months, adding to the tightening supplies, trade sources said.
In the paper market, the front-month 180-cst HSFO time spread soared to a near two-year high of $13.75 a tonne, while the front-month crack against Dubai crude rose to its narrowest discount since December 2020 at minus $1.39 a barrel despite rising crude prices, Refinitiv data showed.
The fuel oil markets' bullish sentiment was bolstered by data this week showing residual fuel stocks across key storage hubs falling.
Residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) storage hub fell 4% to a to a four-week low this week, while those in the Singapore and Fujairah hubs dropped to multi-month lows, official data showed.
Fuel oil stocks in the ARA refining and storage fell 50,000 tonnes to 1.2 million tonnes in the week ended Aug. 26, data from Dutch consultancy Insights Global (IG) showed.
Compared with last year, however, the ARA inventories were 9% higher and on par with the five-year seasonal average of 1.18 million tonnes. In Singapore, fuel oil inventories fell 4% to a six-month low of 21.18 million barrels, or 3.34 million tonnes, amid persistently weak net import volumes.
In the Fujairah hub, fuel oil stockpiles fell 11% to a five-month low of 8.69 million barrels, or 1.37 million tonnes, and were down by 44% from the same period last year.
Bangladesh is reviewing the lease renewals of five oil-fired power plants as they near expiry, despite a government plan to move away from oil and instead use natural gas for power generation, two senior government officials told Reuters. This comes amid soaring gas prices globally, with Asian liquefied natural gas (LNG) prices LNG-AS currently at their highest for this time of the year since at least 2010, and they are well above oil-linked gas prices.
For now, Bangladesh is considering increasing imports of fuel oil to 3 million tonnes in the financial year starting from July, this year, from 2.75 million tonnes in the previous financial year, a senior official from Bangladesh Petroleum Corp told Reuters.
Lebanon's energy ministry said it had picked Dubai's ENOC in a tender to swap 84,000 tonnes of Iraqi high sulphur fuel oil with 30,000 tonnes of Grade B fuel oil and 33,000 tonnes of gasoil.
ENOC won the tender, which is part of a deal between the two countries that allows the cash-strapped Lebanese government to pay for 1 million tonnes of Iraqi heavy fuel oil a year in goods and services. The Cambodian government is seeking the return of an oil tanker and its crew who have been detained in Indonesia, alleging that the ship had loaded oil illegally from an offshore oil field, a government official said on Thursday.