SINGAPORE: Asia’s refining margin for 0.5% very low sulphur fuel oil fell by more than 10% in March compared to the start of the month, data showed on Friday.

The front-month crack closed at $9.70 a barrel at the Asia close (0830 GMT) on the last trading day of March.

Asia’s VLSFO market came under pressure in the month on tepid bunkering demand, while supply inflows remained steady.

Singapore’s 0.5% VLSFO cash differential closed at $5.50 a tonne on Friday, steadying in single-digit premiums over Singapore quotes.

Meanwhile, the market structure for high sulphur fuel oil (HSFO) continued to widen in backwardation, as growing domestic seasonal demand in the Middle East could tighten exports to Asia in the coming months.

The front-month 380-cst HSFO crack climbed to a discount of $11.72 a barrel at Friday’s Asia close, maintaining nine-month highs and ticking up by 15% from the start of the month.

Fuel oil inventories in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dipped 1% to 1.23 million tonnes in the week ended March 30, data from Dutch consultancy Insights Global showed.

Oil prices ticked down on Friday as bullish sentiment about Chinese demand and potential Middle Eastern supply disruptions was tempered by uncertainty over US economic data to be released later in the day.

PetroChina said that it expects Chinese refined fuel demand to rise 3% this year from pre-COVID levels in 2019 and that of natural gas to be up 5.5% from last year, after reporting a record net profit for 2022.

China’s Chambroad Petrochemicals is set to start operating a refining unit in the southern province of Hainan in May to produce mainly bitumen with an aim to export the material used to pave roads, the independent refiner’s chairman told Reuters.

Shell has decided not to go ahead with two projects it was studying to produce biofuels and base oils in Singapore, a company spokesperson said.