European fuel oil paper volumes in November MOC up 522% on month
1st December 2020 15:20 GMT

The volume of fuel oil swaps traded in November during the Platts Market on Close assessment process in London increased 522% month on month, as the physical market saw an increase in offerings approaching the end of the year.

Some 280,000 mt of fuel oil derivative contracts traded in the London MOC process in November, up from 45,000 mt in October and up from 70,000 mt in November 2019.

The main buyer was BP, which completed 30 of the 56 trades, with all either between 1% FOB NWE barges versus 3.5% FOB Rotterdam barges, known as the hi-lo, or 1% FOB NWE cargo flat price trades. The two largest sellers were Totsa with 12 trades and Trafigura with nine trades across the month.

The most commonly traded derivative was the FOB NWE 1%S fuel oil cargoes versus FOB Rotterdam 3.5%S fuel oil barges, accounting for 110,000 mt traded throughout the month.

Trades of FOB Mediterranean 3.5%S fuel oil cargoes versus Rotterdam 3.5%S fuel oil barges – known as the Med/North – also saw a notable increase on the month, to 10 completed trades, up from only one trade the previous month.

The fuel oil markets have seen the previous tightness of supply due to European refinery run cuts ease, as the end of year dampens demand.

Typically with the approach of the end of year, companies tend to try limit the amount of oil they hold in storage for balance-sheet purposes, leading to less demand and more availability.

"There are less bids in the market, as many want to hold as little as possible at year end," one trader said.

Bunkerworld .,
1st December 2020 15:20 GMT