SINGAPORE: Cash premiums for cargoes of both grades of high-sulphur fuel oil (HSFO) jumped to multi-month highs on Friday, lifted by an abrupt rise in buying interest for physical cargoes that began on the first day of July.
Trade sources said fuel oil supplies were on a downward trend and some tightening was expected this quarter but recent gains were likely driven by a so-called bull play.
The firming differentials extend Thursday’s sharp gains which saw cargo differentials for both HSFO grades as well as 0.5% very low-sulphur fuel oil (VLSFO) flip from discounts to premiums.
Cash premiums for 180-cst and 380-cst HSFO were both at over three-month highs of $2 a tonne and $1.48 a tonne to their Singapore quotes, respectively.
At the start of the week, the 180cst HSFO cash differential was at a $1.02 a tonne discount and at minus 90 cents for 380-cst HSFO.
The VLSFO cash premium, however, slipped to a 67 cent per tonne premium on Friday, down from an over two-month high of 70 cents in the previous session but up from a 90 cents per tonne discount at the start of the week.
Residual fuel inventories at the Amsterdam-Rotterdam-Antwerp (ARA) and Fujairah storage hubs fell over the past, while those in the Singapore and Fujairah hubs rose, official data showed.
Fuel oil stocks in the ARA refining and storage fell by 63,000 tonnes, or 4%, to a three-week low of 1.44 million tonnes in the week ended July 1, data from Dutch consultancy Insights Global (IG) showed.
Compared with last year, the inventories at the ARA hub were 4% lower but were above the five-year seasonal average of 1.36 million tonnes.
In the Fujairah hub, fuel oil stockpiles dropped 8% to an 11-week low of 11.86 million barrels, or 1.87 million tonnes in the week to June 28 amid firm export volumes and steady bunkering demand.
In Singapore, fuel oil inventories rose 2% to a two-week high of 23.95 million barrels, or 3.77 million tonnes, as net import volumes rebounded from recent lows.
Three 380-cst high-sulphur fuel oil (HSFO) cargo trades were reported in the window totalling 60,000 tonnes. No VLSFO cargo trades were reported.
UAE’s ADNOC sold another 80,000-tonne straight-run fuel oil (SRFO) cargo from its plant in Ruwais loading over June 25-26 to GS Caltex at a $60 per tonne premium to Middle East 380-cst HSFO quotes on a DAP basis, trade sources said.
ADNOC previously sold four similar SRFO cargoes in June totalling about 320,000 tonnes following an outage of its residue fluid catalytic cracker (RFCC) around the start of the month which was expected to last about two to three weeks.