The very low sulphur fuel oil (VLSFO) market in Asia experienced a softening trend on Monday, influenced by expectations of ample supply throughout July. According to LSEG data, the Singapore VLSFO cash premium declined to $4.50 per metric ton, while cracks for August fell below $10 per barrel, reflecting a decrease from the previous week.
Last week had seen a rebound in market prices, but this upward momentum has since subsided amidst sufficient inventories and moderate demand for bunkering services. Trade sources are closely monitoring loadings from Kuwait’s al-Zour and Nigeria’s Dangote following recent fire incidents, although no significant disruptions to exports have been reported thus far.
Meanwhile, Indonesia’s Pertamina has reportedly offered additional V-1250 low sulphur waxy residue for loading from Balikpapan in mid-July, as indicated by shipping records. The restart status of the company’s crude distillation unit IV remained pending as of late June.
In contrast, benchmarks for high sulphur fuel oil (HSFO) remained stable, with spot 380-cst premiums closing at $4.80 per ton on Monday. However, cracks for FO380DUBCKMc1 slipped to discounts of approximately $6.70 per barrel.
Other Developments
Oil prices saw an uptick on Monday, buoyed by projections of a supply deficit driven by peak summer fuel consumption and OPEC+ production cuts anticipated for the third quarter. Yet, gains were tempered by global economic uncertainties and increased output from non-OPEC+ sources.
In trading news, Trafigura and Gunvor purchased nine cargoes of crude underpinning the international Brent benchmark in the past week, with ongoing bids indicating strong market activity. This activity contributed to notable price increases since the benchmark’s assessment methodology changed in 2023.
Additionally, a minor fire incident occurred in a storage area of Kuwait’s al-Zour refinery, with production reportedly unaffected according to Kuwait Integrated Petroleum Industries Company (KIPIC).
Meanwhile, a Chinese radio station launched broadcasts on Monday regarding Arctic sea ice conditions along Russia’s coast, aimed at vessels navigating the Northeast Passage. This initiative underscores China’s efforts to utilize northern routes as viable alternatives to the Suez Canal.
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