SINGAPORE: Asian refiners’ revenue from producing very low sulphur gasoline oil (VLSFO) climbed to six-month highs this week as output cuts hold provides tight whereas demand for the transport gasoline at most ports are again at pre-pandemic ranges, merchants and analysts mentioned.
The development is more likely to keep for the remainder of the yr, encouraging Asian refiners to prioritise VLSFO manufacturing together with petrochemical feedstock naphtha, the place demand has additionally firmed.
The front-month VLSFO crack was at $9.43 per barrel above Dubai crude on Tuesday, its highest since April 10. The residual gasoline additionally posted the best common margin amongst refined merchandise thus far this yr, based on information on Refinitiv Eikon.
“0.5% (VLSFO) has little question been the strongest a part of the barrel this yr,” mentioned Matt Stanley, Dubai-based oil dealer at Starfuels.
Not like different refined fuels equivalent to gasoline, gasoil and jet gasoline, which have been hammered by mobility restrictions imposed in the course of the pandemic, residue gasoline demand in transport and energy technology has been comparatively resilient.
“International ports are seeing a robust pick-up in bunker (gasoline) demand,” mentioned Sri Paravaikkarasu, director for Asia oil at FGE.
She added decrease VLSFO arbitrage volumes from Brazil would tighten provides within the Singapore hub, providing additional value help.
“Each the high-sulphur gasoline oil (HSFO) and VLSFO markets will proceed to stay tight over November and December,” she mentioned.
“Bunker demand in Asia has rebounded to above pre-COVID ranges all over the place besides in Fujairah,” mentioned a Singapore-based gasoline oil dealer. Fujairah’s demand declined on account of decrease tanker visitors as Center East producers minimize exports, he mentioned.
The world’s largest bunkering hub Singapore posted a 6% rise in complete marine gasoline gross sales within the first 9 months this yr.
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