Fuel oil outshines other refined products in Asia on tight supply, demand recovery
Asian refiners’ profit from producing very low sulphur fuel oil (VLSFO) climbed to six-month highs this week as output cuts keep supplies tight while demand for the shipping fuel at most ports are back at pre-pandemic levels, traders and analysts said.
The trend is likely to stay for the rest of the year, encouraging Asian refiners to prioritise VLSFO production along with petrochemical feedstock naphtha, where demand has also firmed.
The front-month VLSFO crack was at $9.43 per barrel above Dubai crude on Tuesday, its highest since April 10. The residual fuel also posted the highest average margin among refined products so far this year, according to data on Refinitiv Eikon.
