Asia’s very low sulphur fuel oil market retained strength on Thursday, driven by a fall in inventories and prospects of optimistic bunker demand.
Onshore inventories in Singapore have declined to five-week lows as imports fell in the week, while demand held firm and led to a drawdown.
Premiums for Singapore bunker deliveries have trended higher, hitting more than $30 a metric ton over cargo quotes for prompt dates versus $25 to $30 in mid-January and about $20 in early January, sources said.
Bunker barges for VLSFO have also tightened this month, with the availability of slots stretching to about two weeks forward compared with the typical average of one week, sources added.
The cargo premium was initially capped due to an ample supply pool, but recent prospects of more refuelling demand following Red Sea events have given the market some support.
Singapore’s VLSFO cash premium was pegged at $8.20 a ton on Thursday, while the margin climbed to a premium of $13.77 a barrel.
Meanwhile, 380-cst high-sulphur fuel oil held steady, with premium holding at $3 a ton, while margin closed at a discount of $13.16 a barrel.
INVENTORIES
Singapore fuel oil stockpiles fell 6.6% to 21.01 million barrels (3.31 million metric tons) in the week to Jan. 24, hitting five-week lows, Enterprise Singapore data showed.
On the export front, most outflows from Singapore headed for China and Australia, while the bulk of Singapore’s fuel oil inflows came from Brazil and Iraq.
OTHER NEWS
– Oil prices rose on Thursday after data showed U.S. crude stockpiles fell more than expected last week, while the Chinese central bank’s cut in banks’ reserve ratio reinforced hopes of more stimulus measures and economic recovery.
– A fire at a Rosneft-owned export-oriented oil refinery in the southern Russian town of Tuapse overnight has been extinguished, local officials said early on Thursday.
– Novatek may need up to two months to repair a fuel-producing complex at its Baltic Sea Ust-Luga terminal which was damaged in a suspected Ukrainian drone attack, the Kommersant business daily reported on Thursday citing sources.
– QatarEnergy said the Red Sea conflict may impact deliveries of some liquefied natural gas cargoes as they take alternative routes, although shipments are being managed with buyers.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Sohini Goswami)