Asia’s cash premium for very low sulfur fuel oil (VLSFO) fell for a third consecutive session on Wednesday, weighed by a lackluster downstream bunker market, while incoming supplies remained steady.
Singapore’s spot 0.5% VLSFO premium dropped to $6.45 a tonne, while the market’s front-month crack softened from the previous session to $8.53 a barrel at the Asia close (0830 GMT). Demand for low-sulfur bunkers at Singapore, the world’s top bunker hub, showed little recovery in March after a decline in volumes in February, traders said. The bunker price difference between delivered and ex-wharf VLSFO continued to be very narrow to near parity, which is not enough to break even, sources said. Meanwhile, the high sulfur fuel oil market was able to retain some support despite heavy arrivals of high-sulfur Russian barrels.
Singapore’s spot 380-cst HSFO premium rose to $8 a tonne on Wednesday, buoyed by steady buying and expectations of higher seasonal demand. The front-month 380-cst HSFO crack eased slightly to a discount of $12.93 a barrel at the Asia close (0830 GMT), after hitting nine-month highs in the previous day. Over in the UAE’s Fujairah, residual fuel oil stocks rose 2% to 11.60 million barrels (1.83 million tonnes) in the week ended March 27, Fujairah Oil Industry Zone data published by S&P Global Commodity Insights showed.
Large inflows of Russian crude oil and refined products have boosted tank storage demand at Fujairah, pushing storage fees at the transit and blending hub to all-time highs in the first quarter, industry sources said. Oil rose for a third session on Wednesday as a halt to some exports from Iraqi Kurdistan raised concerns about tightening supply, while easing fears of a global banking crisis supported risk sentiment in the wider markets. Russia and India are looking at expanding the use of the Northern Sea shipping route that passes through the Artic and which could include the building of processing facilities, Russia’s Interfax agency reported on Wednesday.
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