SINGAPORE: The cash premium for very low sulphur fuel oil (VLSFO) declined for a third consecutive day amid a softening backwardation in its market structure.

The 0.5% VLSFO cash differential fell $8.59 to a premium of $69.61 per tonne to Singapore quotes on Thursday, dipping below June’s average value of $70 per tonne.

Supply tightness kept the market buoyed for most of June and July, but expectations of more arbitrage and regional supplies into end-July and August led to a downward price correction.

Reflecting this, the market’s front-month backwardation declined by more than $10 from the previous day to $40.25 per tonne at the Asia close (0830 GMT) on Thursday.

Taiwan’s Formosa sold 35,000 tonnes of 0.5% low sulphur fuel oil cargo for end-July loading, at a premium of about $60 over Singapore quotes, FOB basis, according to market sources. The cargo is scheduled to load out of Mailiao between July 30-31.

Singapore fuel oil inventories slid further to a nine-week low of 19.802 million barrels in the week to July 20, down 5% week-on-week, latest data from Enterprise Singapore showed.

Oil prices fell on Thursday as demand concerns outweighed tight global supply, after US government data showed tepid gasoline consumption during the peak summer driving season.

Japan’s customs-cleared crude oil imports rose 22.1% in June from the same month a year earlier, the Ministry of Finance said on Thursday.