Asia’s market for very low sulphur fuel oil (VLSFO) clung to its recent strength on Thursday, while onshore stockpiles fell further at Singapore to their lowest in two months.
VLSFO has been supported by strong bids for loading dates into early June, which were keeping the cash differential buoyed above $10 a metric ton.
However, some trade sources said it was not clear if the market strength will sustain due to high incoming supplies from various origins.
Asia is set to receive higher arbitrage volumes from the West this month, boosted particularly by arrivals from Brazil and Mexio, according to LSEG Oil Research this week.
Nigeria’s Dangote also offered residual fuel for loading in early June, via a tender that closes on Tuesday. The combination cargo comprised 120,000 tons of low-sulphur straight run material and slurry, sources said.
Meanwhile, cash differentials for high sulphur fuel oil (HSFO) remained stuck in discounts on Thursday, though cracks received a further boost as crude futures weakened. The June 380-cst HSFO crack closed above $3 per barrel over crude quotes, based on trade sources and LSEG data.
INVENTORY DATA
– Singapore residual fuel inventories were at 19.39 million barrels (about 3.05 million metric tons) in the week to May 14, hitting two-month lows, Enterprise Singapore data showed.
OTHER NEWS
– Oil prices slumped on Thursday on expectations for a U.S.-Iran nuclear deal that could result in sanctions easing, while a surprise build in U.S. crude oil inventories last week heightened investor concerns about oversupplyy.
– Saudi Aramco said it had signed 34 preliminary deals with major U.S. companies, potentially worth up to $90 billion in a push to deepen commercial ties with the United States on the back of President Donald Trump’s visit to the kingdom.
– South Korean petrochemical feedstocks company YNCC is considering investments to retool existing facilities to increase its ethane cracking capabilities, the company’s chief executive officer told Reuters.
– Japanese oil companies are scaling back decarbonisation initiatives, including hydrogen and ammonia projects, amid a global shift towards more stable and cost-effective fossil fuels.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters