Cash premiums for very low sulphur fuel oil (VLSFO) extended gains in Asia on the first trading day of November, buoyed by expectations of constrained supplies.
The Singapore 0.5% VLSFO cash premium climbed for a fourth straight session to $25.25 a metric ton on Wednesday, scaling a nine-month high.
Market backwardation also surged, with the balance-month/Dec timespread widening to $34.50 a ton at the Asia close, said industry sources.
“LSEG Oil Research believes the low-sulphur fuel oil’s current strength will remain firm through the fourth quarter,” said Emril Jamil, senior analyst for crude and fuel oil at LSEG.
Jamil added that the supply tightness results from a lack of outflows from Kuwait’s Al Zour refinery, amplified by a lack of low-sulfur blendstocks and finished products from the region.
In contrast, cash differentials for both the 180-cst and 380-cst high sulphur fuel oil (HSFO) grades have sunken into discounts.
FUJAIRAH INVENTORIES FUJAIRAH
Fuel oil inventories at Fujairah rebounded 24.6% to 11.02 million barrels (1.74 million tons) in the week to Oct. 30, according to Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.
Source: Hellenic Shipping News
