BUNKERWORLD INDEX: Prices climb amid surging oil complex, varying demand patterns
11th March 2022 11:19 GMT

Volatility continued to rock bunker markets with unprecedented highs in the week ending March 10, amid differing buying behaviors at key ports.

The S&P Global Commodity Insights Bunkerworld 0.5% sulfur fuel oil index finished the week at $959/mt, down $80/mt on the day, but up $74/mt on the week and $242/mt higher than 30 days earlier.

The BW380 index, which represents value for 3.5% sulfur fuel oil, ended the week at $715.50/mt, down $41.50/mt on the day, but up $55/mt on the week and $161.50/mt higher than 30 days earlier.

Crude oil futures have climbed, with Russia-Ukraine peace talks failing and thereby raising concerns of a prolonged conflict, which could extend supply disruptions.

There has been a considerable widening in the 0.5%S/3.5%S FO spread -- the Hi-5 -- but this is not due to bunker demand, analysts at S&P Global Commodity Insights said. “The supply side is the major driver of the wider spread as diesel’s relentless strength is pulling bunker components to the distillate pool, reducing the offer of on-spec VLSFO,” S&P Global said.

The imbalance in the fuel oil complex was there before the war, with high gas prices supporting 0.5%S FO, but now it has been aggravated because of a shortage of FCC/Coker feed due to refiners avoiding Russian product, S&P Global said.

At Singapore, bunker demand has fluctuated on a daily basis as crude oil has been volatile on the Russia-Ukraine war, market sources said, adding that buying appetite has been largely lackluster amid high crude oil prices.

With bunker prices at EMEA ports soaring to unprecedented levels, all grades of bunker fuel at ports in both Rotterdam and Gibraltar have reached their highest prices since Platts assessments from S&P Global Commodity Insights began. Increased uncertainty in the market has also caused demand to increase as buyers are uncertain prices will drop in the near future.

On the US East Coast, the Russia/Ukraine conflict and the ban of Russian oil has caused competition for 0.5%S FO and feedstocks, a source said. On the West Coast, buyers in Vancouver await on the sideline in hope of lower futures prices.

The BW Indexes are weighted daily indexes made up of price assessments at 20 key bunkering ports. To obtain a representative geographical spread, the ports were selected by size with reference to their geographical importance.

The BW 0.5% Sulfur Index ports are Hong Kong, South Korea, Shanghai, Singapore, Japan, Las Palmas, Durban, Fujairah, Gibraltar, Piraeus, Rotterdam, St. Petersburg, Houston, Los Angeles, New York, Balboa and Santos.

The BW380 Index ports are Busan, Canary Islands, Colombo, Durban, Fujairah, Gibraltar, Hong Kong, Houston, Los Angeles, New York, Offshore Nigeria, Panama Canal, Piraeus, Rotterdam, Santos, Shanghai, Singapore, St. Petersburg, Suez and Tokyo.

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Bunkerworld ,
11th March 2022 11:19 GMT