London (Platts)--20Nov2012/715 am EST/1215 GMT
The discount of the front-month 3.5% sulfur fuel oil swap in the Mediterranean against Northwest Europe has reached its widest in nine months due to growing supply and lackluster demand in the Med. The front-December HSFO FOB Med cargoes swap compared with the FOB Rotterdam barges swap was assessed Monday at minus $10.75/mt, down $1.50/mt from Friday, and the widest since February 1, when the Med was assessed $12/mt below the North. During the Platts Market on Close assessment process on Monday, Galaxy, a frequent player in the Med HSFO market, was offering a December Med/north swap at a discount of $10.50/mt, but it was not lifted at the close. The trading house was also showing an aggressive offer in the physical prompt market in the same process for a 30,000 mt cargo CIF basis Genoa, but it also failed to find a buyer. Article continues below...Platts 3rd Annual Middle Distillates Conference27-28 November 2012, Intercontinental Hotel, Hamburg, GermanyThe conference will once again act as a forum for oil majors, refiners, traders and fuel buyers from end user communities such as the automotive, aviation and shipping sectors to discuss how to maximise profits from the middle of the barrel whilst still offering value to dependant industries.
The discount of the front-month 3.5% sulfur fuel oil swap in the Mediterranean against Northwest Europe has reached its widest in nine months due to growing supply and lackluster demand in the Med. The front-December HSFO FOB Med cargoes swap compared with the FOB Rotterdam barges swap was assessed Monday at minus $10.75/mt, down $1.50/mt from Friday, and the widest since February 1, when the Med was assessed $12/mt below the North. During the Platts Market on Close assessment process on Monday, Galaxy, a frequent player in the Med HSFO market, was offering a December Med/north swap at a discount of $10.50/mt, but it was not lifted at the close. The trading house was also showing an aggressive offer in the physical prompt market in the same process for a 30,000 mt cargo CIF basis Genoa, but it also failed to find a buyer.
Article continues below...
The conference will once again act as a forum for oil majors, refiners, traders and fuel buyers from end user communities such as the automotive, aviation and shipping sectors to discuss how to maximise profits from the middle of the barrel whilst still offering value to dependant industries.
"There is a huge amount of oil in the market; the Med is overflowing with physical barrels," one HSFO trader said. HSFO in the Med tends to trade at a discount to the North throughout the year, but the spread often widens in the winter months. This is due to the increase of Russian supply through the Black Sea ports rather than the northern ones due to freezing of the river navigation routes in the country in the winter. The recent weakening of HSFO in the Med has been pulled by more supply and falling demand for bunker fuel, traders said. The East Med ports such as Istanbul and Piraeus in Greece have seen less demand in November as demand from ferries has dropped, bunker traders said Tuesday. Some support for demand has been coming from the West Med, traders added, but ample supply has been weighing on values. The local supply of HSFO in the Med has been good over the past few weeks, as the recent hit from the weaker distillates crack has not yet curtailed output as refineries are still using the already purchased November crude, one HSFO trader said.--Paulina Lichwa-Garcia, paulina_lichwa@platts.com, Ned Molloy, ned_molloy@platts.com, George Martiniuc, george_martiniuc@Platts.com--Edited by Jonathan Fox, jonathan_fox@platts.com
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