Asia’s 180-cst high-sulphur fuel oil (HSFO) market firmed on Friday amid sustained strong utility demand for cargoes of the fuel.
Despite absent trade activity, the cash differential for 180-cst HSFO climbed to a four session high of $12.12 a tonne to Singapore quotes, while the prompt-month time spread rose to a more than 1-1/2 year high of $14.75 a tonne.
Surging liquefied natural gas (LNG) prices are prompting utilities across Asia and the Middle East to burn more HSFO than usual to meet increased power demand during summer, analysts and traders said.
The strong demand for the residual fuel oil could last beyond the summer as the global economic recovery from the coronavirus gathers momentum and global LNG prices hold firm at more than twice where they averaged in 2020, the analysts said.
Weekly data showed declined in residual fuel inventories across all four storage and trading hubs in Europe, the United States, Middle East and Asia, the latest industry data showed.
Fuel oil stocks in the ARA refining and storage fell by 18,000 tonnes to a five week low of 1.18 million tonnes in the week ended Sept. 2, data from Dutch consultancy Insights Global (IG) showed.
In Singapore, fuel oil inventories fell to a more than six-month low of 20.7 million barrels, or 3.26 million tonnes, amid persistently tepid net import volumes.
In the Fujairah hub, to a five-month low of 8.25 million barrels, or 1.3 million tonnes, despite lower weekly export volumes.
In the United States, residual fuel inventories fell to a more than one-month low of 28.74 million barrels, or about 4.53 million tonnes, amid disruptions of Mexican heavy crude and fuel oil supplies following an outage at an offshore production platform.
Pakistan’s PSO awarded one of three fuel oil import tenders it was seeking for delivery in the second-half of September, trade sources said.
The sources said PSO likely reduced its imports in this tender amid the recent drop in HSFO premiums and congested unloading berths where a number of fuel oil-laden tankers were still waiting to discharge.