Asia Fuel Oil-Cash premium for VLSFO drops to near six-month low

Asia’s cash premium for very low sulphur fuel oil (VLSFO) extended declines to nearly six-month lows on Wednesday, weighed by supply pressure and flattish downstream bunker demand.

The Singapore 0.5% VLSFO cash premium fell to $1.50 a metric ton on Wednesday, while front-month cracks held stable at premiums of around $11 a barrel.

The East of Suez appears to be amply supplied, with steady volumes of blend components offered in the regional market, along with prospects of more Kuwaiti Al Zour supply potentially, said industry sources.

Recent bullish bids for high sulphur fuel oil (HSFO) have also retreated, with cash premiums for the 380-cst grade FO380-SIN-DIF pegged at $5.75 a ton, while cracks, dipped to discounts of about $11 a barrel.

In tenders, Taiwan’s CPC is seeking 40,000 tons of LSFO for delivery in February. The tender closes on Wednesday with validity until Friday.

INVENTORIES

Fujairah fuel oil inventories fell 13.5% to 8.61 million barrels (1.36 million tons) in the week to Jan. 8, FOIZ data published by S&P Global Commodity Insights showed.

OTHER NEWS

– Oil steadied on Wednesday, giving up earlier gains, as Middle East supply concerns arising from the Israel-Hamas war and the shutdown of a top Libyan oilfield balanced worries about weak economic growth.

– The United Kingdom Maritime Trade Operations (UKMTO) organization and British maritime security firm Ambrey on Tuesday received reports of incidents in the Red Sea near Yemen.

– The Maritime and Port Authority of Singapore (MPA) said it has selected a consortium to carry out a trial for the charging of electric harbour craft over two to three years.

– Pertamina International Shipping, a unit of Indonesian state energy company Pertamina, said on Wednesday it plans to add six new very large gas carriers in 2024 as it eyes fleet expansion focused on gas transport.

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 Varun H K)