Cartagena VLSFO selling at a premium to MGO

Very low sulphur fuel oil (VLSFO) in Cartagena, Colombia, began selling at a premium to its counterpart marine gas oil (MGO) last month, a trend that has so far continued in February.

MGO was at a premium to VLSFO in Cartagena of more than $100/t when Argus began assessing Cartagena VLSFO in October 2019. The premium shrunk the next two months and in January, VLSFO began selling higher than MGO, according to Argus data.

Higher demand from buyers is driving up Cartagena VLSFO compared with competing ports like Panama, two market participants said. There was at least one Colombian supplier who has run out of supplies and is not expected to receive a resupply until mid-February due to the elevated buying activity.

The January monthly average of VLSFO in Cartagena was $692/t compared with the MGO monthly average of $676.50/t. So far this month VLSFO has sold $13/t higher than MGO. In December, right before the International Maritime Organization's sulphur emissions restriction for marine fuel took effect, MGO at Cartegena was $40/t higher than VLSFO, down from a $93/t premium to VLSFO in November.

This rise has also reversed the VLSFO premium between Cartagena and its main competing port, Panama. For the last three months of 2019 Panama VLSFO was as high as $24/t over Cartagena but it became a $60.50/t premium in January and $78/t premium so far in February, according to Argus data.

By Luis Gronda