Lack of high sulfur fuel oil cargoes leaves West Mediterranean bunker market dry: traders
Time：2014-10-17
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Thin supply in Northwest Europe at the end of September and first decade of October because material was being arbitraged to Singapore during refinery maintenance has left the whole of Europe tighter, they said.
However, while an unworkable prompt arbitrage to Asia and tumbling crude prices had subdued barge demand in ARA in recent days, the dearth of material remained acute in the Mediterranean where sweeter crude slates run at regional refineries were heard to have dampened usual production volumes, sources said.
Consequently the physical Med/North spread — the difference of 3.5% FOB Mediterranean cargoes and 3.5% FOB Rotterdam barges — remained strong, being assessed at $4/mt Wednesday.
“We are desperately looking for product, but cannot see anything until the second half of November,” a trader said. “It is due to refinery margins [which have seen refineries] receiving West African barrels.”
The major Mediterranean bunker hubs of Algeciras and Gibraltar and the port of Las Palmas have been experiencing severe shortage of bunker specification fuel oil in the past few weeks as a result.
“We are not offering material on a spot basis until October 20,” one of the biggest suppliers said, adding all suppliers in Gibraltar were dry.
Algeciras and Gibraltar were struggling with prompt supply because Cepsa’s Algeciras refinery has units in maintenance, sources said.
Other big physical bunker suppliers in Gibraltar — Aegean, Bomiflot, Macoil and Penninsula — were tight for prompt HSFO stocks, traders said.
In Las Palmas, supply remained tight with three major players — Aegean, Cepsa and Peninsula — unable to quote prompt inquiries. “We do not get any quotes for inquiries. No one can offer,” a local trader said.
As a result of the tightness, delivered bunker fuel oil premiums have spiked to the $32.50/mt over CIF Mediterranean HSFO cargoes, the highest since September 19, 2012, Platts data showed.
Delivered HSFO Gibraltar premiums retained high levels, with only two suppliers offering prompt deliveries and only in restrained volumes, traders said. 380 CST HSFO Gibraltar basis was assessed at $492.50/mt.