Asia’s very low sulphur fuel oil (VLSFO) market climbed for a fourth consecutive session on Thursday, while the market kept an eye on potential uptick in bunker demand.
Ongoing tensions in the Red Sea are expected to potentially drive up refueling demand at bunker hubs Singapore and Rotterdam, as ships lift more fuel that is cheaper compared to far-flung ports.
“The recent escalation of Red Sea tensions has resulted in more vessels diverting around the Cape of Good Hope, which will increase voyage time and bunker demand in the near term,” said Ivan Mathews, head of Asia refining and global fuel oil service at consultancy FGE.
Bunker premiums for very low sulphur fuel oil have inched up from last week, though anticipated increases in demand have yet to fully materialise, traders said.
Cargo premiums rose, though remained bound in single digits, while cracks, climbed above premiums of $12 a barrel.
High sulphur fuel oil softened, with the 380-cst cash premium FO380-SIN-DIF easing to $3.50 a metric ton on Thursday, while cracks, held steady at discounts of $11 to $12 a barrel.
INVENTORIES
Singapore onshore inventories of fuel oil STKRS-SIN fell 2.2% to 22.50 million barrels (3.54 million metric tons) in the week to Jan. 17, according to Enterprise Singapore data.
Most of Singapore’s net fuel oil imports came from storage hub Malaysia in the week, while Russian inflows also held firm.
On the exports front, most outflows from Singapore were headed for Hong Kong and the Philippines.
OTHER NEWS
– Oil prices rose on Thursday as OPEC forecast relatively strong growth in global oil demand over the next two years, while the market also eyed disrupted U.S. oil production amid a cold blast and tensions in the Middle East.
– The re-routing of a growing number of ships around Africa to avoid potential attacks in the Red Sea is altering refueling patterns and boosting demand for bunker fuel at far-flung ports, from the Mauritius to South Africa to the Canary Islands.
– Pertamina International Shipping, a unit of Indonesian state energy firm Pertamina, is considering an initial public offering next year to help finance its expansion plan, a company official said on Thursday.
– BP and Sinopec signed a memorandum of understanding at the World Economic Forum in Davos to strengthen cooperation in areas including fuel sales, oil and gas trading, and upstream activities, according to a post on Sinopec’s Weibo account.
WINDOW TRADES O/AS
– 180-cst HSFO: No trade
– 380-cst HSFO: Two trades
– 0.5% VLSFO: One trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Mrigank Dhaniwala)