Asia’s fuel oil refining margins were set for annual declines, data showed on Friday, amid higher supplies from Russia after Western sanctions, while softer demand at the world’s largest bunkering hub Singapore also capped market recovery.
The VLSFO refining crack was on track for a decline of over 25% compared to the start of the year, Refinitiv data showed Friday.
CASH DIFFERENTIALS
Singapore’s 0.5% VLSFO spot differential fell to a premium of $10.52 a tonne to Singapore quotes on Friday.
Despite a turbulent mid-year rally to record-high premiums, the VLSFO spot market ended the year on a relatively stable note versus early-2022, when it was at a premium of $13.84 a tonne.
Singapore’s 380-cst HSFO cash differential was little changed at a premium of $2.75 a tonne to Singapore quotes on Friday, ending the year slightly stronger compared to January when it was at a thin discount.
The spot 380-cst HSFO differential hit a multi-year high in April after a slew of bunker fuel contamination cases constrained supplies, though the rally quickly gave up gains amid an uptick in high-sulphur supplies from Russia.
INVENTORIES
Singapore’s landed fuel oil stocks averaged at 20.90 million barrels (3.29 million tonnes) a week in 2022 so far, compared with 22.48 million barrels (3.54 million tonnes) in 2021, Enterprise Singapore data showed.
In contrast, landed stocks at Fujairah averaged at 11.47 million barrels (1.81 million tonnes) a week in 2022 so far, climbing from 10.26 million barrels (1.62 million tonnes) in 2021, based on data from the Fujairah Oil Industry Zone.
Inventories in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell by more than 4% compared to the start of the year, at 1.11 million tonnes in the week ended Dec. 29, latest data from Dutch consultancy Insights Global showed.
