Spot fuel oil premiums were capped on Thursday, while weekly onshore inventories at Singapore spiked to their highest in more than eight years, latest data showed.
Stronger supplies have flooded Asia in recent months, while bunker fuel demand slowed towards the year-end holiday season, contributing to the build, trade sources said.
High inventories are expected to continue capping recovery in market benchmarks. Spot differentials for both very low sulphur fuel oil (VLSFO) and high sulphur fuel oil (HSFO) grades remained in narrow premiums to cargo quotes.
Meanwhile, trading direction of refining margins diverged for both grades, with a few trading houses buying up HSFO derivative contracts while VLSFO market softened, said sources.
Cracks for VLSFO closed lower at premiums of about $10.50 per barrel, while 380-cst HSFO cracks closed higher at discounts of $3.90 per barrel, according to data compiled by LSEG.
Reflecting the stronger performance of HSFO, the hi-five fuel oil spread narrowed day-on-day, closing at about $91 per ton.
Meanwhile, Thailand’s PTT offered a cargo of fuel oil for January loading in a tender that closes on Dec. 19. The cargo, comprising 35,000 tons of LSFO, is expected to load from Map Ta Phut between Jan. 20 and 22.
INVENTORY DATA
– Singapore onshore fuel oil stockpiles surged by over 60% week-on-week to 28.97 million barrels (about 4.56 million metric tons) in the week to Dec. 18, data from Enterprise Singapore showed on Thursday.
