Asia’s spot market for very-low sulphur fuel oil (VLSFO) weakened further on Thursday, inching towards discounted territory amid a steady downtrend since end-June.
The market has been underpinned by steady incoming supplies and expectations of even more arrivals after Kuwait’s Al Zour refinery ramped up.
Demand for VLSFO as a marine fuel has also been lacklustre so far in July, weighing on delivered bunker fuel premiums, said traders.
The cash differential for 0.5% VLSFO was pegged at a premium of 27 cents per metric ton on Thursday, closing near parity over Singapore quotes.
The product’s front-month crack held relatively steady, closing at a premium of $7.78 a barrel.
Meanwhile, the high sulphur fuel oil (HSFO) market showed signs of stabilising after a recent rally.
Cash differential for 380-cst HSFO was pegged at a premium of $12.50 a ton, while front-month crack fell to a discount of $8.17 a barrel.
In tenders, Indonesia’s Pertamina recently offered three stems of marine fuel oil for August loading from Sungei Pakning and one stem of low sulphur fuel oil from Balikpapan. Each stem size is 200,000 barrels.
SINGAPORE INVENTORIES O/SING1
Onshore fuel oil stocks STKRS-SIN eased 11% to 18.35 million barrels (2.89 million metric tons) in the week to July 12, Enterprise Singapore data showed.
Meanwhile, weekly net imports, calculated by subtracting total exports from total imports, more than doubled week-on-week at 1.05 million metric tons.
Top origin countries for Singapore’s fuel oil imports were from Brazil and Kuwait in the week, while exports out of Singapore mostly headed for China and Bangladesh.
OTHER NEWS
– Oil prices climbed on Thursday after U.S. inflation and economic data sparked hopes that the Federal Reserve may have fewer interest rate hikes in store and Chinese trade data showed monthly oil imports were the second-highest on record in June.
– Saudi Arabia imported record volumes of discounted Russian fuel oil in June, a near 10-fold annual increase to meet summer power generation demand and maintain crude exports despite OPEC+ production cuts, according to traders, analysts and Kpler data.
– Contaminated marine fuels from several suppliers led to fouled engines on about a dozen vessels operating from the U.S. Gulf Coast this spring, according to Lloyd’s Register and marine fuel testing service VPS.
– The Shanghai Futures Exchange (ShFE) is looking to expand its commodities warehousing network outside China, and is examining systems and regulations in the sector overseas, three sources with direct knowledge of the matter told Reuters.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Sonia Cheema)