Asia’s very-low sulphur fuel oil (VLSFO) margin climbed to a four-month high on Tuesday, led by indications of tighter blending components and a recent recovery in gasoline cracks.

The product’s front-month margin closed at a premium of $12.19 a barrel at the Asia close (0830 GMT), and was last higher on Feb. 13 this year, pricing data showed.

The higher Asian VLSFO cracks are a reflection of tighter supplies due to a slowdown in marginal VLSFO component production, said consultancy FGE in a note on Tuesday.

This comes as topping margins for sweet crudes such as Angolan Girassol turned negative over the past three months, said FGE.

The cash premium for VLSFO also firmed on Tuesday, closing at $7.25 a tonne to Singapore quotes, led by stronger bids day-on-day.

High sulphur fuel oil (HSFO) also strengthened, with cash premium for the product climbing to $1.99 a tonne, while front-month margin closed higher at a discount of $8.44 a barrel at the Asia close.

Meanwhile, Indonesia’s Pertamina offered residual fuel products for July loading, via a tender which closes on Tuesday.

OTHER NEWS

– Oil rose on Tuesday on bargain hunting, though gains were limited as investors remained cautious ahead of key policy decisions by the U.S. Federal Reserve and other central banks.

– A state of emergency was introduced around the area where two fuel tankers collided on the Lena River in southeastern Russia’s Irkutsk region, damaging a container and spilling gasoline into the water, the region’s governor said early on Tuesday.

– Denmark’s Maersk MAERSK_A said it has secured fuel for the first container vessel able to run on carbon-neutral methanol for its inaugural journey from South Korea to Denmark.

– Interest in methanol as an alternative fuel for bunkering has grown in the shipping industry over the past year, as companies and ports ramped up projects to achieve net-zero emissions by 2050.

WINDOW TRADES

– 180-cst HSFO: One trade

– 380-cst HSFO: No trade

– 0.5% VLSFO: No trade
Source: Reuters