The market structure for very low sulphur fuel oil (VLSFO) strengthened in Asia on Thursday, while inventories at key trading hub Singapore extended declines and maintained near a six-month low.
The front-month timespread for 0.5% VLSFO widened to a backwardation of $10.95 a tonne at the Asia close (0830 GMT), compared with $8 a tonne in the previous day.
Market sources said that this was not fundamentally driven as demand remained average, while supplies to East of Suez did not tighten significantly.
Demand for bunkers has trended steady to poorer week-on-week, with delivered premiums for 0.5% VLSFO sliding to a range of mid $10s to low $20s over Singapore cargo quotes, traders said this week.
Meanwhile, the cargo cash premium for 0.5% VLSFO (MFO05-SIN-DIF) closed at $11.75 a tonne to Singapore quotes on Thursday, while front-month margin (LFO05SGDUBCMc1) was at a premium of $11.94 a barrel at 0830 GMT.
High sulphur fuel oil (HSFO) was little changed, with spot 380-cst HSFO cash premium (FO380-SIN-DIF) stable at $5.25 a tonne, though front-month margin (FO380DUBCKMc1) climbed to a discount of $7.31 a barrel.
However, cash premium for 180-cst HSFO extended declines to $1.75 a tonne, as spot offers continued to trend lower.
In tenders, Taiwan’s CPC offered 22,000 tonnes of catalytic fractionator bottoms (CFB) for May to June loading.
SINGAPORE INVENTORIES
Onshore fuel oil stocks at Singapore fell to 19.17 million barrels (3.02 million tonnes) in the week to May 10, based on Enterprise Singapore data. (STKRS-SIN)
This came despite a rebound in weekly net fuel oil imports, calculated by subtracting total exports from total imports, which rose 94% week-on-week to 540,000 tonnes.
However, weekly net fuel oil imports still averaged lower in May at 453,000 tonnes a week, compared with 578,000 tonnes a week in April, based on the data.
OTHER NEWS
– Oil eased on Thursday as traders warily watched for signs of progress on talks to raise the U.S. debt ceiling, after surging in the previous session on optimism over U.S. fuel demand.
– Japan’s Cosmo Oil, a unit of Cosmo Energy Holdings Co Ltd, shut a 102,000-barrel-per-day (bpd) crude distillation unit at its Chiba refinery on May 17, said a company official on Thursday.
– Two cargoes of diesel sailing from Russia to South America have switched their destination to Brazil from Chile, according to Refinitiv Eikon’s vessel monitoring data.
– The U.S., UK, Denmark and other countries have called for more action, including increased surveillance, over the booming practice of unregulated oil transfers at sea, as fears grow over potential pollution, according to a paper submitted to the U.N.
WINDOW TRADES
– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters
