Refining cracks for very low sulphur fuel oil (VLSFO) climbed to a two-month high in Asia on Friday, supported by expectations of strong global bunkering demand.

Singapore’s February VLSFO crack rose to a premium of $15.04 a barrel at Friday’s Asia close (0830 GMT), based on LSEG data. LFO05SGDUBCMc1

The margin was higher by nearly 10% from last week, extending a climb for a second consecutive week, the data showed.

Stronger refuelling demand at global bunker ports amid Red Sea shipping diversions has given the fuel oil market some uptick despite ample supplies in January.

The cargo cash premium was pegged higher at $10.75 a metric ton on Friday, as bids and offers strengthened while market backwardation widened.

Meanwhile, the high sulphur fuel oil (HSFO) market held stable through the week, with Friday’s cash premiums unchanged from the previous session, though crack for the 380-cst grade FO380DUBCKMc1 rose day-on-day to a discount of $12.09 a barrel.

INVENTORIES

ARA inventories STK-FO-ARA rose 7.4% week-on-week to 1.481 million tons in the week to Jan. 25, climbing to the highest in two and a half years, data from Dutch consultancy Insights Global showed.

OTHER NEWS

– Oil eased on Friday after rising to their highest since December in the previous session, but were set for their biggest weekly gain since October as positive U.S. economic growth and signs of Chinese stimulus boosted fuel demand sentiment.

– Russia’s 2023 oil and gas condensate production declined by less than 1% to 530 million metric tons (10.6 million barrels per day), Deputy Prime Minister Alexander Novak told the energy ministry’s in-house magazine.

– India’s fuel consumption is expected to rise 2.7% in the next fiscal year beginning on April 1, initial government estimates showed.

– Bankrupt oil firm Lord Energy and its owner Hazim Nada are suing the United Arab Emirates, its president, its state oil firm ADNOC, a Swiss investigative firm and others for $2.8 billion, alleging fraud and a targeted smear campaign, a court filing showed.

WINDOW TRADES O/AS

– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade

Source: Reuters reported by Jeslyn Lerh edited by Shweta Agarwal