Spot fuel oil premiums were largely stable on Tuesday as overall trade thinned before a new trading month begins, though strength in the low-sulphur market held through recent sessions.
Singapore backwardation spread between August and September continued to widen, reflecting tight prompt supply fundamentals.
The intermonth spread widened to about $8.30 per metric ton on Tuesday, compared with less than $8 on Monday, based on broker indications.
The market has firmed in recent sessions on the back of tighter bunker supply for prompt delivery dates, as well as expectations of a potential drop in VLSFO supplies in August.
On the high-sulphur front, benchmarks were rangebound amid an absence of fresh drivers.
Meanwhile, Lanka IOC sought VLSFO for delivery between Sept. 15 and 20 at Colombo port. The tender closes on Tuesday.
INCOMING SUPPLIES
VLSFO supplies to Asia are expected to fall in August, led by lower arrivals from Brazil and Europe, based on consultancy FGE.
“Brazil’s gasoline and diesel output was elevated in June as refiners shifted yields from fuel oil to transport fuels, resulting in reduced fuel oil output,” said FGE in a note on Tuesday.
OTHER NEWS
– Oil prices fell on Tuesday amid concerns about demand in China, while the market shrugged off the risk of conflict escalating in the Middle East.
– Iran seized the Togo-flagged tanker Pearl G in the Gulf on Friday and it was carrying 700,000 litres of smuggled Iranian crude, Tehran’s semi-official Tasnim news agency reported.
– Two large oil tankers that collided and caught fire near Singapore earlier this month are afloat and anchored in Malaysian waters, with an investigation into the incident ongoing, Malaysia’s marine department said on Tuesday.
– China’s COSCO Shipping Corporation has signed a preliminary agreement with Australia’s Fortescue to jointly build a green fuel supply chain to help reduce pollution from the shipping industry, the Chinese company said.
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 Shailesh Kuber)