SINGAPORE: Asia’s high-low (HiLo) sulphur fuel oil spread widened to a record high on Thursday, driven by strong fundamentals in the very low sulphur fuel oil (VLSFO) market.

The front-month HiLo spread, which is the price difference between front-month 0.5% VLSFO and 380-cst high-sulphur fuel oil (HSFO) swaps, climbed for a fifth straight day to a fresh high of $387.00 a tonne on Thursday, Refinitiv data showed.

The HiLo spread last hit a record high of $371.50 a tonne on June 9. The VLSFO market has retained strength on tight supply and steady bunkering demand, while HSFO lagged in recovery.

The 0.5% VLSFO cash differential was at a premium of $77.14 a tonne on Thursday, Reuters data showed. The differential climbed sharply to average $70.30 in June versus $37.33 in May.

Meanwhile, the 380-CST HSFO differential was at a discount of $1.41 a tonne on Thursday.

The differential, which has sunk into a discount as the month ends, averages at a premium of $0.20 in June, sliding from $7.42 in May.

Singapore fuel oil inventories dipped 3% to a two-week low of 21.348 million barrels in the week to June 29, data from Enterprise Singapore showed.

Oil prices traded sideways on Thursday as the market weighed concerns of global supply and a build in US fuel product inventories. - OPEC+ enters a second and final day of meetings on Thursday with sources saying the group is unlikely to decide imminently to pump more barrels to the market beyond August.