Asia Fuel Oil-VLSFO cash differential flips from premium to discount

Asia’s cash differential for very low sulphur fuel oil (VLSFO) flipped from a premium to discount on Tuesday as the market remains underpinned by plentiful incoming supplies.

The cash differential MFO05-SIN-DIF dropped to a discount of 41 cents a metric ton to Singapore quotes, after holding in premiums for more than eight months, Reuters data showed.

The market has weakened on the back of lower-priced offers while broader inventory levels remained high.

Refining cracks for May LFO05SGDUBCMc1 also eased slightly day-on-day to premiums of about $11.90 a barrel.

Meanwhile, high sulphur fuel oil (HSFO) was little changed, with 380-cst differentials FO380-SIN-DIF staying in rangebound discounts below $2 a ton, while cracks FO380DUBCKMc1 closed Tuesday at discounts of about $11.35 a barrel.

INCOMING SUPPLIES

Fuel oil supplies to East Asia totalled about 4.5 million tons for April, Reuters calculations based on LSEG ship-tracking data showed Tuesday, with more loadings to emerge later in the month.

Volumes for April compared lower to March, when arrivals breached 7 million tons and far surpassed an average typical monthly volume of 5 million tons, the data showed.

Trade sources said that fuel oil inventories remained sufficient amid heavy arrivals last month and as some cargoes spilled over for discharge this month.

OTHER NEWS

– Oil prices rose on Tuesday, underpinned by signs that demand may improve in China and the U.S., the world’s biggest oil consuming nations, and growing concerns of a widening conflict in the Middle East that could affect supply from region.

– The Port of Baltimore opened a temporary channel on Monday, freeing some tugs and barges that had been trapped by last week’s bridge collapse, but officials said wider restoration of commercial shipping remained frustrated by unyielding conditions.

– Rosneft and Indian Oil Corp have yet to renew an oil supply deal that expired in March as they have been unable to agree on price and volumes, forcing India’s top refiner to turn to spot markets, three sources with knowledge of the matter said.

– Venezuela’s oil exports in March rose to the highest level since early 2020 as customers rushed to complete purchases ahead of the likely expiration of a temporary U.S. license that has allowed the country to freely sell its crude, according to shipping data and documents.

WINDOW TRADES

– 180-cst HSFO: No trade
– 380-cst HSFO: No trade
– 0.5% VLSFO: No trade
Source: Reuters (Reporting by Jeslyn Lerh; Editing by Shailesh Kuber)