18-11-2017

Istanbul fuel oil premium to Novorossiisk falls to 1-month low

The premium of delivered 380 CST high sulfur fuel oil prices in Istanbul over those in Novorossiisk has fallen to a one-month low on weather conditions and resupply costs.

The premium was last assessed Thursday at $17/mt, its lowest since October 9th when it reached $15/mt. By 1130 GMT, the premium was heard to be only about $10/mt, making it the lowest July 6.

Lower fuel prices in Istanbul would make it a more attractive port in which to bunker.

Novorossiisk typically trades at a discount to Istanbul as more fuel oil loads from the Russian port, and shipowners are able to resupply from a Lukoil refinery which is able to offer fuel at more attractive prices than Istanbul.

In Turkey, a large share of the fuel oil for the bunker markets is stored at the Marmara terminals owned by OPET, about 100 km (62 miles) west of Istanbul.

So far in 2017, the spread has averaged $25/mt and $26/mt in the fourth quarter to date, S&P Global Platts data showed.

“I suspect that bad weather in the Black Sea is causing this,” a bunker trader said.

Strong winds between 6-11 meters/second and gusts up to 12-17 m/s were seen today with a swell of between 0.7-1.2 meters, a shipping report said.

“If Istanbul suppliers managed to purchase cheap cargoes with the drop in Brent on Tuesday, this could be why we are seeing the drop in premiums between the two ports,” he added.

Furthermore, prices in Istanbul received support late last week from the nearby Greek port of Piraeus, which due to a strike and supply issues lost business to Istanbul.

“If a ship wants to take in 30,000 mt in Piraeus but they can only berth for 10 hours, they will have to move to Istanbul,” a source said.

During large resupply if ships aren’t able to fill their tanks at berth a second option would be to complete the refueling at anchorage.

However, as container lines lose money by remaining idle at anchorage, the remainder of the resupply is completed at the next port, typically Istanbul, during the cargo operations executed at that port.

This hiccup has passed allowing prices in Istanbul to fall back slightly and for the premium to Novorossiisk to recede.

Source: Platts

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