August Med HSFO supply seen contracting on rising bitumen production
Mediterranean high sulfur fuel oil supplies look likely to contract in
August as some refiners are shifting towards bitumen production, sources said
Tuesday.
One refiner said he did not have any cargoes available for export "for
the time being," with the earliest possible availability being October, while
a second refiner in the Mediterranean will not have any cargoes available from
one of its refineries in the next 10-25 day period, a source there said.
"At present, we are maximizing bitumen production," the first refiner
said.
Typically, the Mediterranean fuel oil market firms in July, August and
September on the back of improved demand for bunker fuel due to the usual
increase in cruise ship traffic, increased bitumen production at the expense
of HSFO, demand for use for power generation from the Middle East, as well as
a decrease in supplies from the Black Sea.
Med/North, the discount or premium for FOB Mediterranean high sulfur fuel
oil cargoes to FOB Rotterdam barges, has been trading at an average $4.48/mt
discount to Rotterdam barges so far in July after BP brought several cargoes
from northwest Europe to the Mediterranean.
The August Med/North swap was assessed flat Tuesday, while on an outright
price basis, the CIF Mediterranean HSFO market was assessed at $296.50/mt.
Typically, Mediterranean HSFO trades at a premium to FOB Rotterdam barges
in July, Platts data show. In July 2014, Med HSFO traded at an average
$1.20/mt premium to Rotterdam barges.