Gibraltar Hi-5 bunkers spread at fresh low amid tightness in HSFO
9th September 2020 22:33 GMT

The premium of very low sulfur fuel oil to its high sulfur counterpart at Gibraltar has fallen to its lowest level since at least July 2019 -- when S&P Global Platts began assessing VLSFO -- amid contrasting supply and demand fundamentals, sources said.

“[There are] heavy issues with HSFO avails in the Gibraltar straits,” one bunker buyer said, adding that, in some cases, HSFO prices were above those for VLSFO.

VLSFO supply has been ample, meanwhile, amid the demand destruction caused by COVID-19.

The premium of 0.5% sulfur bunker fuel over 3.5% fuel oil -- known as the Hi-5 bunker spread -- was assessed at $12.00/mt on Sept. 8, Platts data showed. The spread was as high as $346.00/mt in late December before IMO 2020 -- the lower, 0.5% sulfur cap on marine fuel globally since Jan. 1.

That was amid a sharp fall in flat price in the broader oil complex.

Meanwhile, the Hi-5 spread at Malta was $7.00/mt on Sept. 8, with sources saying supply of HSFO there was tighter than at Gibraltar.

HSFO has seen a strong pull this year from the US Gulf Coast for use as coker feed, with sources noting that exports from the Baltic Sea have been bypassing Europe to head trans-Atlantic.

Some 7.26 million barrels of HSFO headed west to the US from the Baltic Sea during August, according to commodity data company Kpler, up from August 2019's 1.33 million barrels.

Bunkerworld .,
9th September 2020 22:33 GMT