New York (Platts)--17Feb2011/737 am EST/1237 GMT

Bunker values along the US Gulf Coast hit 29-month highs on Wednesday as resupply for the product continues to take cues from Brent crude prices rather than the US benchmark WTI, market sources said.

Houston 380 CST was assessed $5 higher to a midpoint of $578/mtw, a level not seen since September 30, 2008, when the midpoint was $577.50/mtw.

Eastern US ports hit 2008 levels on Tuesday.

Bunker resupply for the Gulf, cargoes of 380 RMG, was assessed $1.65 higher at $90.05/barrel. RMG is the resupply designation for the fuel while CST indicates the viscosity and is an engine classification.

This put potential resupply for the Gulf Coast region at $572/mtw, or well over WTI crude, which was assessed at $84.98/barrel, or about $540/mtw.

New Orleans' 380 CST bunker fuel was assessed up $4.50 to a midpoint of $583/mtw. It has not been over $580 since it was $597.50 on September 8, 2008.

Meanwhile, New York Harbor 380 CST was unchanged at $589.50/mtw. Other bunker values along the East Coast also did not move.

Both coasts were seeing bunker highs due to recent increases in resupply, which traditionally was priced off WTI when it was a premium to Brent, but has now, along with other products, been looking to Brent for direction after a sustained inversion of the historical relationship between the benchmarks.

Resupply product in New York, comparable to No. 6 residual fuel with 3% sulfur content, was assessed 25 cents higher $88.30/barrel. This put potential resupply before any costs at $560/mtw.

"Bunkers are up due to the cost of (residual fuel), which like the rest of the products is following Brent," said a major supplier using residual fuel as a catch-all for bunker resupply grades. "Brent is the new WTI. The fuel market follows Brent now."

"In my career, I haven't seen (residual fuel), Brent and WTI like this," said a broker. He was referring not just to the recent "flip" in resupply's historical relationship to WTI, but also the flip and wide margin between WTI and Brent.

"It's a shock. Nothing follows WTI anymore. It's all Brent," said a major fuel oil and bunker trader.

"The whole market is really all over the place with the jumble of numbers," a trader added. "This is new territory."

Brent was assessed by Platts up $2.10 to $103.80/barrel, or a $18.82 premium to WTI.

--Bristol Voss, bristol_voss@platts.com

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