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Rotterdam bunker fuel at 2-year high on backwardated barge market

London (Platts)--14 Sep 2017 907 am EDT/1307 GMT


Rotterdam delivered 380 CST bunker fuel has soared to more than a two-year high on a heavily backwardated physical high sulfur fuel oil market.

Bunker prices hit $320.00/mt Wednesday, the highest assessed level since July 2015.

The 3.5% barge market has been well supported for most of September, with persistent backwardation in many intermonth spreads. Vitol, one of the most active participants in 3.5% barges, has been the largest buyer by volume in the market this month with almost 60% of the volume bought, or just below 140,000mt, according to data from the Platts Market on Close assessment process.

"The barges have been very strong. Fundamentally, there is not much demand so I am not sure what will happen with all the oil that has been bought in the MOC," a trader said.

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The support for the physical HSFO barge market is almost immediately transferred to the bunker market.

The strong backwardation in the remainder of the calendar year is likely supported by maintenance at one of the largest fuel oil producers in Rotterdam.

BP is expected to have 200,000 b/d of their crude distillation unit capacity offline, as well as 83,000 b/d of their vacuum distillation unit and 62,000 b/d of their fluid catalytic cracking units offline as well.

The turnaround is expected to last until the end of October, after which the backwardation in the HSFO barge curve recedes to flat.

Additionally, climbing ICE Brent futures and reports from traders of tight fuel oil availability supported bunker fuel prices at the Dutch port.

--Amandeep Dhir, amandeep.dhir@spglobal.com
--Anthony Guida, anthony.guida@spglobal.com
--Eleni Pittalis, eleni.pittalis@spglobal.com




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