European fuel oil flows reach 17-month high in March

European shipments of fuel oil rose to their highest since October 2017 in March, on stronger exports to the Asia-Pacific region.

Exports to Singapore — the world's largest bunkering hub — rose to 2.1mn t, the highest so far this year, compared with the monthly average of 1.5mn t last year. Eastbound flows remained strong last month. The Singapore second-month 380cst swap premium to high-sulphur fuel oil cargo prices in northwest Europe averaged around $35/t in March, down from $40/t in February.

Long-haul shipments to the US continued, supported by heavy fuel oil stockbuilding ahead of sanctions against Venezuela. US refiners are expected to wind down purchases from Venezuela by 28 April. Fuel oil inventories in the US hovered around all-time lows in March, reaching 4.6mn t on 29 March, data from the IEA showed.

Fresh demand from Saudi Arabia for stockpiling ahead of the fasting month of Ramadan in May for power generation also drove European exports. Shipments to Saudi Arabia reached their highest in seventeen months at 320,000t in March.

Straight-run fuel oil stopped flowing westbound from Europe recently as prices increased to weigh on arbitrage economics. Values switched to a premium over Brent crude in March for the first time since January 2018, as fresh stockpiling demand ahead of the sulphur cap next year pushed prices up. Belgium-based shipowner Euronav purchased some straight-run fuel oil in March, as part of its strategy to store compliant marine fuels before 2020.