London (Platts)--4Feb2013/751 am EST/1251 GMT
The Mediterranean high sulfur fuel oil market discount to its Northwest European counterpart has deepened on excess supply and lack of demand, traders said Monday. The physical Med/north -- the difference between FOB Rotterdam 3.5% sulfur fuel oil barges and FOB Med 3.5% sulfur fuel oil cargoes -- slipped to a $10.25/mt discount for the Mediterranean Friday, Platts data shows. The Mediterranean was last weaker December 19 at an $11.50/mt discount. "The physical Med/north average for the past three months is minus $7.44/mt and the one and two year average is around minus $5/mt, so the Med is definitely showing signs of weakness," a trader said Monday. "We have a lot of oil to sell, but there are no buyers," said a second trader. Article continues below...Sign up to European Marketscan today. European Marketscan delivers everything you need to gain a full and clear 360 degree view of the European oil products market each business day. European Marketscan is the tool used by all the major players in the oil market. It provides trusted, reliable and comprehensive coverage of European refined oil product markets and ensures you are kept up to date with the driving forces behind the latest changes in key product prices.
The Mediterranean high sulfur fuel oil market discount to its Northwest European counterpart has deepened on excess supply and lack of demand, traders said Monday. The physical Med/north -- the difference between FOB Rotterdam 3.5% sulfur fuel oil barges and FOB Med 3.5% sulfur fuel oil cargoes -- slipped to a $10.25/mt discount for the Mediterranean Friday, Platts data shows. The Mediterranean was last weaker December 19 at an $11.50/mt discount. "The physical Med/north average for the past three months is minus $7.44/mt and the one and two year average is around minus $5/mt, so the Med is definitely showing signs of weakness," a trader said Monday. "We have a lot of oil to sell, but there are no buyers," said a second trader.
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European Marketscan delivers everything you need to gain a full and clear 360 degree view of the European oil products market each business day. European Marketscan is the tool used by all the major players in the oil market. It provides trusted, reliable and comprehensive coverage of European refined oil product markets and ensures you are kept up to date with the driving forces behind the latest changes in key product prices.
"[Bunker suppliers] were unable to create ullage due to the [weather] delays, but once cleared they had excess supply so needed to get rid of product," added the first trader. Healthy refinery margins were also contributing to an increased supply outlook as refineries boosted production despite recent adverse weather conditions in the Mediterranean. "Refinery margins are too good to cut back production, usually you don't have a gasoline crack in double digits at this time of year, so everyone is maxing out their production and fuel is the byproduct of this bonanza," said the cargo trader last week. The Mediterranean began the year at a deep discount to the North, but by January 11 had moved to a $2.75/mt premium before moving back to a discount again. The market tightened at the beginning of the year despite a steady flow of supply from the usual suppliers, such as Greece's Hellenic Petroleum and Motor Oil, Turkey's Tupras and Spanish refiners. The Mediterranean high sulfur fuel oil market usually trades at a discount to NWE material. But during times of reduced supply or increased demand Mediterranean HSFO cargoes can trade at a premium to Rotterdam barges. This can open up arbitrage opportunities to bring cargoes to the Mediterranean from NWE.--Marko Trtica, marko_trtica@platts.com--Edited by Martin O'Rourke, martin_orourke@platts.com
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