SINGAPORE: Asia’s very low sulphur fuel oil (VLSFO) premiums extended an uptrend towards record highs on Monday, led by a persistent shortage in blending components amid strong gasoil margins.

The 0.5% VLSFO cash differentials climbed for a ninth consecutive day to $79.01 per tonne over Singapore quotes on Monday, approaching the previous record high of $79.23 per tonne on June 2, Reuters data showed.

Supply tightness for VLSFO could spill into the following month, while steady downstream demand for VLSFO bunkering also capped downside in cash premiums, according to market sources.

Refining margins for VLSFO have also been steady-to-firmer, but continued to lag behind that of 10-ppm gasoil margins.

Gasoil cracks have climbed sharply throughout the month, driven by tight Chinese exports and recovering global demand. The sharp rally has incentivised more refiners to produce middle distillates instead of other products, sources said.

Oil prices edged down on Monday in a volatile session as investors stood on guard for any moves against Russian oil and gas exports that might come out of a meeting of leaders of the Group of Seven (G7) nations in Germany.