NWE LSFO premium up on storage demand

Low-sulphur fuel oil's premium to the high-sulphur equivalent in northwest Europe is the widest in two weeks, with support found ahead of the sulphur cap in marine fuels next year.

Low-sulphur fuel oil (LSFO) cargo swaps widened to $38.25/t to high-sulphur fuel oil (HSFO) barge swaps at the close yesterday, the widest since the five-year high on 30 May.

Demand for fuel oil with a maximum sulphur content of 1pc has increased recently for storage ahead of the International Maritime Organisation (IMO) marine fuel legislation that comes into force next year.

Oil companies have started storing compliant fuels in Europe, and storage demand from Singapore is providing price support as some companies ship compliant fuels eastbound. Singapore is the world's largest bunkering hub, nearly three times the size of Rotterdam in terms of marine fuel sales volumes.

Shipping company Euronav bought at least eight 30,000t cargoes of compliant fuels to store in its ultra large crude carrier (ULCC) off Malta. The Oceania received compliant fuels in ship-to-ship operations from different sources, including from west Africa, Italy, Israel, the UK and Belgium, according to vessel tracking company Vortexa.