Marine fuel oil prices versus crude hit record as gasoil prices surge

22 Jun 2022

Quantum Commodity Intelligence – A shortage of diesel in Asia has propelled the relative price of the world’s main bunker fuels versus crude to a record high, Quantum data showed Wednesday, as companies struggle to blend sulfur down to global standards.

Marine fuel oil 0.5% was valued at $961/mt FOB Singapore on Wednesday by 1630 Singapore time, $31/b above where Brent futures were trading at the same time, based on a density of 6.9.

While flat prices remain almost $100/mt off a record high reached two weeks ago, the premium over crude is at a record owing to the sharp rise in ultra low sulfur diesel prices where the price impact is rippling down the distillate stack to higher sulfur grades.

Gasoil 0.25% cargoes loading out of Singapore were assessed at $169.12/b on Wednesday, a figure equivalent to $1,259/mt FOB Singapore - $300/mt over marine fuel oil cargoes.

While gasoil 0.25% is falling in price relative to diesel, the premium of it over marine fuel has doubled in the past month on tight supplies.

Diesel prices are surging in Asia due to slumping exports from China, which have fallen 90% on the year to below 30,000 bpd as the country’s refining sector slows down due to sluggish fuel demand owing to Covid restrictions.

While mobility has picked up in June so far in China, market sources do not expect that to result in a sharp rise in exports, despite refiners likely to be making record profits from selling on to the market owing to cheaper Russian crude.

The sharp rise in relative values has widened the difference in prices between Europe and Asia to a three week high, with front month swaps in Asia trading at $80/mt above those in Europe.