The recent rally in Asia’s very-low sulphur fuel oil (VLSFO) paused on Tuesday after more spot offers emerged, though premiums remained strong.

Trading house Gunvor continued buying the product at firm premiums for July loading, while several offers emerged from other trading houses on the Platts window.

The cash premium for 0.5% VLSFO (MFO05-SIN-DIF) was pegged at $19.72 a metric ton over Singapore quotes on Tuesday, after spiking sharply in the previous day.

Meanwhile, front-month refining margin (LFO05SGDUBCMc1) closed relatively steady at a premium of $13.91 a barrel at the Asia close (0830 GMT).

The market structure continued to widen, with front-month July/August backwardation timespread firming to $19.45 a ton at the Asia close.

Separately, Asia’s high sulphur fuel oil (HSFO) market was stable in comparison. The spot 380-cst HSFO cash premium (FO380-SIN-DIF) was pegged unchanged at $1.93 a ton, while front-month refining margin (FO380DUBCKMc1) closed at a discount of $9 a barrel at the Asia close.

CHINA FUEL OIL DATA

China’s fuel oil imports dipped in May after hitting a decade-high in April, while exports of low-sulphur marine fuels rose, General Administration of Customs data showed on Tuesday.

Total fuel oil imports in May were at 2.58 million metric tons, down 3% from April, though the level was still strong compared to historical monthly volumes. May imports were 150% higher than the same month last year, the data showed.

Meanwhile, exports of low-sulphur marine fuels totalled 1.85 million metric tons in May, up 36% from April. The recovery came in line with firmer sales for bunkering in May across key refuelling hubs, including Singapore and the UAE’s Fujairah.

OTHER NEWS

– Oil prices were mixed on Tuesday after China cut benchmark lending rates less than some expected while demand was seen rising this year, clouding the outlook for the world’s largest crude importer.

– China’s 2023 crude oil demand is expected to grow 3.5% to 740 million metric tons, slower than previously expected, according to an expert at China National Petroleum Corporation’s (CNPC) research arm on Tuesday.

– U.S. sweet and sour oil differentials narrowed significantly this month, pricing data showed, as demand for higher sulfur crudes climbed from refineries and exporters while supplies tightened.

– Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead in the race to secure gas supplies from Doha’s massive production expansion project.

WINDOW TRADES

– 180-cst HSFO: No trade

– 380-cst HSFO: No trade

– 0.5% VLSFO: Two trades
Source: Reuters