16-06-2016

Low sulfur fuel oil barges at 20-month high premium to high sulfur fuel oil on tight supply

sulfur

Low sulfur fuel oil barges rose to a 20-month high premium to 3.5% sulfur barges of $19.50/mt Wednesday on tight supply and elevated demand.

It was the highest premium since October 27, 2014 for a product that has typically been assessed at parity with the more actively traded HSFO FOB Rotterdam barges since a reduction in January 2015 in the permitted sulfur levels for bunker fuels in Emission Control Areas in Northwest Europe.

But refinery strikes in France have resulted in LSFO supply tightness that has yet to be alleviated as the refineries gradually return to work.

“The refineries are saying they are open, but I can’t see much of a supply increase. We still have outstanding buying interest in the market,” an LSFO trader said.

At the same time, HSFO is well supplied.

“There are lot of products being offered in the market for finished spec. There are many suppliers in the market who want us to load, especially front-end,” another trader said.

In the cargo market, LSFO has looked more supported, with the Hi-Lo spread moving to its highest level since January 6.

S&P Global Platts assessed low sulfur FOB NWE cargoes at $232.50/mt Tuesday, a premium of $16/mt to 3.5% FOB Rotterdam barges.

Source: Platts

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