European fuel oil exports to the US have hit their highest level in six months, driven by lower shipments from other parts of the Americas because of sanctions against Venezuela and a refinery shutdown in Trinidad and Tobago.
European fuel oil exports to the US reached 550,000t in the first half of April, exceeding shipments for the whole of March. Venezuelan fuel oil exports to the US have stopped ahead of the enforcement of sanctions from 28 April. And the US has not imported fuel oil from Trinidad and Tobago since November last year, owing to the shutdown of the 165,000 b/d Pointe-a-Pierre refinery.
Venezuela and Trinidad and Tobago accounted for 28pc of total US imports of residual fuel oil in 2018, EIA data show. Residual fuel oil inventories in the US fell to their lowest level in four weeks at 4.5mn t in the week to 5 April, having hit an all-time low at the end of last year, according to the EIA.
Higher westbound fuel oil flows from Europe coincide with export economics to Asia-Pacific slumping to their weakest level in seven months as a result of a well-supplied market in Singapore. Fuel oil stocks in Singapore reached a four-week high of 3.4mn t in the week to 10 April. The Singapore second-month 380cst swap premium to high-sulphur fuel oil cargo prices in northwest Europe narrowed to $25/t on 8-12 April, the lowest on a five-day basis since August.
But weaker demand from Asia-Pacific weighed on fuel oil margins in Europe, as the world's largest bunkering hub in Singapore is the biggest importer of European residual products. The notional high-sulphur RMG barge discount to Ice June Brent crude widened to $8.33/bl on 15 April, the weakest since mid-October.
Straight-run fuel oil also has started flowing westbound from Europe — at least 400,000t is due to be exported to the US in April, shipping sources said. Straight-run fuel oil prices have switched to a premium over Brent crude in March for the first time since January 2018.
