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LSFO bunker fuel premiums reach two-year highs on tight supply, Ukraine: sources
Rotterdam delivered low sulfur bunker fuel premiums soared to a two-year high of of $25.25/mt over 1% FOB Rotterdam barges on tight supply and the crisis in Ukraine, sources said.
While 1% FOB Rotterdam barges have responded to Brent crude futures' correction, delivered LSFO bunker prices have stayed high on lack of material available for prompt delivery, sources said.
"There is nothing from our systems, we have been short for some of our local bunker supplies as well, our tanks are empty," said one LSFO trader.
"Nobody could [deliver Tuesday] except for one supplier, and he has increased prices again today," one trader said.
"The low sulfur fuel oil situation remained incredibly tight," another source said. " It is still an issue to load until early next week," a third bunker source said.
Rotterdam delivered low sulfur bunker fuel followed 1% FOB Rotterdam barges' surge Monday, but remained steady Tuesday, causing bunker premiums to soar to two year highs of $25.25/mt over 1% FOB Rotterdam barges. Mounting tension between Russia and Ukraine had raised fears of demand surge for LSFO in event of Russian gas supplier Gazprom halting pipeline deliveries of natural gas to Ukraine -- a conduit for up to 143 billion cubic meters of gas a year to Europe.
The Northwest European low sulfur fuel oil market was volatile with 1% FOB Rotterdam barge prices surging $30.25/mt Monday, retracing most of those gains Tuesday, falling $24.50 day on day to $639.25/mt, Platts data shows.
With European LSFO already in short supply, speculation about Ukraine sent 1% FOB Rotterdam barges to a $72.75/mt premium -- a 35 month high -- over 3.5% FOB Rotterdam barges Monday, falling back to $62.50/mt.
Mounting tension between Russia and Ukraine had raised fears of demand surge for LSFO in event of Russian gas supplier Gazprom halting pipeline deliveries of natural gas via Ukraine.
The Russian presence in Ukraine's Crimea region has stoked concerns of a repeat of Gazprom's January 2009 gas supply freeze, when supplies were shut off to Ukraine, creating a gas shortage in European markets whose pipeline infrastructure ran through Kiev.
A similar gas supply shortage in Europe could cause demand for LSFO to soar as a substitute for utility burning, though larger gas stockpiles as a result of the mild European winter would likely dampen the impact, sources said.
Source: Platts
While 1% FOB Rotterdam barges have responded to Brent crude futures' correction, delivered LSFO bunker prices have stayed high on lack of material available for prompt delivery, sources said.
"There is nothing from our systems, we have been short for some of our local bunker supplies as well, our tanks are empty," said one LSFO trader.
"Nobody could [deliver Tuesday] except for one supplier, and he has increased prices again today," one trader said.
"The low sulfur fuel oil situation remained incredibly tight," another source said. " It is still an issue to load until early next week," a third bunker source said.
Rotterdam delivered low sulfur bunker fuel followed 1% FOB Rotterdam barges' surge Monday, but remained steady Tuesday, causing bunker premiums to soar to two year highs of $25.25/mt over 1% FOB Rotterdam barges. Mounting tension between Russia and Ukraine had raised fears of demand surge for LSFO in event of Russian gas supplier Gazprom halting pipeline deliveries of natural gas to Ukraine -- a conduit for up to 143 billion cubic meters of gas a year to Europe.
The Northwest European low sulfur fuel oil market was volatile with 1% FOB Rotterdam barge prices surging $30.25/mt Monday, retracing most of those gains Tuesday, falling $24.50 day on day to $639.25/mt, Platts data shows.
With European LSFO already in short supply, speculation about Ukraine sent 1% FOB Rotterdam barges to a $72.75/mt premium -- a 35 month high -- over 3.5% FOB Rotterdam barges Monday, falling back to $62.50/mt.
Mounting tension between Russia and Ukraine had raised fears of demand surge for LSFO in event of Russian gas supplier Gazprom halting pipeline deliveries of natural gas via Ukraine.
The Russian presence in Ukraine's Crimea region has stoked concerns of a repeat of Gazprom's January 2009 gas supply freeze, when supplies were shut off to Ukraine, creating a gas shortage in European markets whose pipeline infrastructure ran through Kiev.
A similar gas supply shortage in Europe could cause demand for LSFO to soar as a substitute for utility burning, though larger gas stockpiles as a result of the mild European winter would likely dampen the impact, sources said.
Source: Platts
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