SINGAPORE: Persistent supply tightness in the Singapore hub sent Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market higher on Wednesday, as suppliers struggled to keep pace with demand.
While bunkering demand in Singapore has softened in December compared to the previous month, tight VLSFO bunker supply and elevated ex-wharf premiums have prompted some buyers to look towards other regional ports for supplies.
The VLSFO cash premium climbed to a more than one-week high of $16.50 a tonne to Singapore quotes. In the paper market, the front-month crack climbed to a near two-week high of $18.50 a barrel above Dubai crude, Refinitiv data in Eikon showed, as crude oil prices fell.
Oil prices fell for a third day straight on Wednesday on growing signs that supply growth will outpace demand next year, and as the World Health Organization said COVID-19 vaccines may be less effective against the Omicron variant.
Meanwhile, fuel oil inventories in the Fujairah bunkering and storage hub extended declines, slipping 2% to a six-week low in the week ended Dec. 13, data released on Wednesday showed.
The lower inventories came amid firm bunkering demand but despite limited exports from the Fujairah hub, trade sources said.
Fujairah Oil Industry Zone inventories for heavy distillates and residues fell by 215,000 barrels, or about 34,000 tonnes, to 8.81 million barrels, or 1.39 million tonnes, data via S&P Global Platts showed.
The fuel oil inventories were 22% lower than year-ago levels.
According to assessments by Refinitiv Oil Research, exports from the UAE dropped to 233,000 tonnes in the week ended Dec. 12, less than half of the 579,000 tonnes exported in the prior week.
“Bunker sales for the week exceeded 160,000 tonnes, as such Refinitiv Oil Research anticipates a draw on heavy distillate inventories for the week,” the data analysts said.
No VLSFO or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window. South Korea’s GS Caltex sold a 40,000-tonne 380-cst HSFO cargo loading from Yeosu over Dec. 17-21 to Chimbusco at a premium of about $3-$4 per tonne to Singapore 380-cst HSFO quotes on an FOB basis.
Sales volumes of marine fuel in the United Arab Emirates’ (UAE) Fujairah marine refuelling and oil storage hub fell 6% in November, official data showed, retreating from a record high hit in the previous month amid higher oil prices.
Fujairah’s November bunker sales volumes totalled 733,000 cubic meters, according to the latest data from the Fujairah Oil Industry Zone (FOIZ), equivalent to about 701,000 tonnes, Reuters calculations showed.
Firm demand in rival Asian ports and elevated oil prices in November contributed to the lower Fujairah bunkering volumes in November, UAE-based trade sources said.
Environmental investigators have uncovered tens of millions of tonnes worth of illegally built crude oil processing and coking capacity in Shandong province, China’s top oil refining hub.
Shandong’s industrial authorities are “neither striving to curb the new illegal production capacity, nor making efforts to rectify the existing illegal capacity,” the Ministry of Ecology and Environment (MEE) said in a statement on Tuesday.
At least 19 independent oil refineries, also known as teapot refineries, in Dongying city were found to have installed 60.4 million tonnes of annual oil refining capacity without government approval, the MEE said.