13 Mar 2014
Tight fuel oil markets, particularly in Europe and Asia, have kept bunker prices high relative to crude oil over the last six weeks.
Bunker prices nearly always trade at a discount to crude for fuel oil grades. In Singapore, for example, the per metric tonne (pmt) premium of crude over IFO380 averaged $107 for the second quarter of this year.
In June, the premium was closer to $130 pmt.
Tight fuel oil markets caused this differential to contract. For Singapore, July prices for IFO380 were only $80 pmt cheaper than crude by comparative volume.
In Rotterdam, the premium for crude shrank from $150 in June to $110 pmt in July.
This means that IFO380 bunkers were $40-50 overvalued relative to crude oil pricing.
There has been some easing of this price difference so far in August, but concern over relatively higher fuel oil and bunker prices remains.
Cast your vote below: will tight fuel oil markets keep bunker prices high relative to crude in the short term?