VLSFO crack sinks to 3-week low
Asia’s 0.5% very low-sulphur fuel oil (VLSFO) front-month crack slipped to a more than three-week low on Friday as ample regional inventories eased concerns over tightening supplies.
The front-month VLSFO crack slipped to $11.83 a barrel above Dubai crude, down 14 cents from the previous session and its lowest since June 30, Refinitiv data in Eikon showed.
Residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) storage hub dropped to a near 1-1/2 year low this week, while those in the Singapore and Fujairah hubs rose, official data showed. In the first half of 2021, China’s exports of VLSFO jumped 52.1% to 9.81 million tonnes. Fuel oil stocks in the ARA refining and storage fell by 182,000 tonnes to 1.03 million tonnes in the week ended July 22, data from Dutch consultancy Insights Global (IG) showed.
The ARA fuel oil stocks were down by 15% from the previous week as exports rose and imports, especially from Russia, fell, said Insights Global’s Lars van Wageningen.
Compared with last year, the inventories at the ARA hub were 21% lower and below the five-year seasonal average of 1.18 million tonnes. In the Fujairah hub, fuel oil stockpiles were 6% higher to a three-week high of 11.76 million barrels, or 1.85 million tonnes, in the week ended July 19.
In Singapore, fuel oil inventories rose 6% to a six-week high of 24.43 million barrels, or 3.85 million tonnes, as net import volumes jumped to a three-month high.
Gunvor bought two 20,000-tonne VLSFO cargoes from Trafigura at a $1 per tonne premium to Singapore quotes in an FOB basis. No high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.
India’s MRPL offered a 25,000-tonne VLSFO cargo with a maximum 0.5% sulphur content loading from New Mangalore over Aug. 21-23 in a tender closing on July 27.
Beijing’s crackdown on the misuse of import quotas combined with the impact of high crude prices could see China’s growth in oil imports sink to the lowest in two decades in 2021, despite an expected rise in refining rates in the second half. Shipments into the world’s top crude importer and No. 2 refiner could be steady, or increase by up to 2% to just over 11 million barrels per day (bpd) this year, consultancies Energy Aspects, Rystad Energy and Independent Commodity Intelligence Services (ICIS) found.