SINGAPORE: The crack for high sulphur fuel oil (HSFO) fell to 30-month lows on Tuesday as steady supply arrivals continued to underpin the market in July.

The front-month 180-cst HSFO/Dubai crack fell to minus $17.64 a barrel at the Asia close on Tuesday (0830 GMT), the lowest since the minus $18.39 a barrel level hit on Jan. 3, 2020, Refinitiv data showed.

HSFO supply is slated to remain plentiful in July due to steady inflows of Middle Eastern oil, on top of oil stored on floating storages, traders said.

The 180-CST HSFO cash differential was at a discount of $2.82 a tonne to Singapore quotes on Tuesday, versus a discount of $2.65 on Monday.

The 380-CST HSFO cash differential was at a discount of $2.33 a tonne to Singapore quotes on Tuesday, versus a discount of $2.08 on Monday. In contrast, the 0.5% very low sulphur fuel oil (VLSFO) market held firmly in strong premiums due to ongoing tightness in blending components, as gasoil supply remained tight for July, traders said. The 0.5% VLSFO cash differential was at a premium of $75.98 a tonne to Singapore quotes on Tuesday, staying above an average of $70 a tonne seen in June.

Oil slipped on Tuesday as concerns of a possible global recession curtailing fuel demand outweighed supply disruption fears, highlighted by an expected production cut in Norway.

China’s Yantai Port Group started on Monday pumping oil into a newly expanded crude oil pipeline that connects the port of Yantai to a group of independent refineries in the country’s refining hub Shandong, state media reported on Tuesday.

India has expanded the excise duty exemption for biofuels to encourage the blending of higher proportions of ethanol and components of vegetable oil with gasoline and diesel, a government order said.

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, dropped towards an 11-week low on Monday, on lower demand across all vessel types.