Asia Fuel Oil-VLSFO premium dips; Singapore onshore imports rise

Spot premium for very low sulphur fuel oil (VLSFO) trended lower in Asia on Thursday as offers for prompt loading dates remained competitive, while onshore inventories and imports into Singapore storage climbed, data showed on Thursday.

Ample prompt supply has been capping recovery in price benchmarks, market sources said. Refining margins for VLSFO remained below $11 per barrel for the second consecutive day.

Meanwhile, high sulphur fuel oil (HSFO) firmed amid stronger bidding action. The cash premium was pegged at $4.50 a metric ton, while refining cracks climbed nearer to discounts of $6 per barrel.

However, the availability of spot supplies continue to limit strength in the market, according to sources.

In tenders, India’s HPCL offered three HSFO cargoes scheduled to load from Vizag between July 24-26, Aug. 3-5 and Aug. 13-15, based on shipping records. The tender closes on Thursday.

Current inventory levels remained ample to meet market demand. Onshore fuel oil stockpiles at Singapore edged up to a two-week high, while net imports recovered for a second straight week, data showed.

The August hi-5 fuel oil spread narrowed for a second consecutive session to $108 per ton on Thursday, amid the weaker VLSFO complex and a relatively supported HSFO market.

INVENTORY DATA

– Singapore inventories inched 1.6% higher to 19.60 million barrels (3.09 million metric tons) in the week ended July 3, Enterprise Singapore data showed.

OTHER NEWS

– Oil prices edged lower on Thursday, retreating from the previous session’s multi-month highs, with investors taking profits as demand caution remained in focus despite last week’s decline in U.S. inventories.

– China has asked its state oil companies to add 8 million tons, or nearly 60 million barrels, of crude oil to the country’s emergency stockpiles to boost supply security, according to analytics firm Vortexa and trading sources.

– Port of Brownsville, along the U.S.-Mexico border, said on Wednesday that it would limit ship traffic due to gale force winds from Hurricane Beryl, a Category 4 hurricane heading for the Gulf.

– Berlin will have to accept a significant discount in a planned sale of shares in bailed-out Uniper, two people familiar with the matter said, adding that the group’s current market valuation was no reliable indicator.

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 Varun H K)