23.06.2020

Maritime market update: high oil stocks in ARA impact marine fuel oil quality

Risavika LNG index front month has gained 0.2 % week on week to 15.61 EUR/MWh. The European LNG market remains bullish on low number of LNG cargoes arriving to European shores and, consequently, lower LNG sendouts from the terminals. However, the market is well supplied by pipeline gas imports and consumption is low due to warm weather and still recovering industrial gas demand.

Oil prices went 2 USD/BBL up after Joint Ministerial Monitoring Committee (JMMC) meeting last Thursday, where the committee  stressed the importance of full compliance with pledged OPEC+ oil production cuts and made moves to ensure that certain countries make up for failing to fully meet their reduction targets last month. Accordingly, fuel oil front prices (FO 3.5) closed at 225.83  USD/t last week, up by 8 % week on week. Low Sulphur (MFO 0.5) front month has gained 6 % and closed at 289.31 USD/t.

Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 1.5 % to 2.89 million tonnes in the week to June 18, according to Reuters.

The high stocks started impacting IMO 2020 compliant fuel oils. The stability of marine fuels available in the ARA hub has deteriorated in the past month because of changing blend components and co-mingling. The 0.5 % sulphur fuel oils tested in ARA have gone from being quite aromatic with higher density to being more paraffinic, according to Argus Media. Co-mingling fuels of different origins can boost sediment levels, which make the blend unstable, and can form sludge, which can cause engine damage.

LNG Risavika - LNG FOB Risavika 

LBG Risavika 10 % - 10 % blend of Liquified Biogas

FO 3.5 FOB Rdam – European 3.5% Fuel Oil Barges FOB Rdam (Platts) Futures Quotes

MFO 0.5 FOB Rdam - European FOB Rdam Marine Fuel 0.5% Barges (Platts) Futures Quotes

MGO 0.1 FOB ARA - Gasoil 0.1% Barges FOB ARA (Platts) Futures Quotes

ULSD FOB ARA - European Diesel 10 ppm Barges FOB ARA (Platts) Futures Quotes

Source: CME Group, Gasum, Reuters, Argus Media

*An estimate for LNG FOB Risavika 

** An estimate for 10 % LBG blend FOB Risavika