Evgenia Vanadzina Gasum

Evgenia Vanadzina

Analyst
evgenia.vanadzina@gasum.com
tel. +358401801066

05.01.2021  

Maritime market update: US demand to support fuel oil prices

Risavika LNG front month has increased considerably to 29.85 EUR/MWh following the upside in European gas prices last week. Continental Europe temperatures forecast below seasonal norms until end of this week and lower gas Russian flows via Velke Kapusany into Slovakia from the beginning of January 2021 are tightening the market.

Oil price remained above 50 USD/BBL, uncertainly with covid vaccine rollout, new strain and OPEC+ meeting regarding production plan for February and beyond were the factors keeping the prices in check. Oil products has weakened slightly for February contracts. Fuel oil 3.5 has lost 1.2% and closed at 282.93 USD/t for front month contracts. Low sulfur oil (MFO 0.5) has decreased 0.1 % and closed at 369.28 USD/t, and MGO 0.1 has decreased by 0.6 % week on week and closed at 415.1 USD/t.

According to Argus Media, US refinery demand for heavy residual feedstocks will support European high-sulfur fuel oil (HSFO) prices in 2021. US refiners purchased a higher number of Russian high-sulfur residual cargoes in 2020, for processing as a substitute for heavy crude grades in their coking units to produce more road fuels. Scrubber-related demand could also boost HSFO sales in the first half of 2021, but this is likely to ease towards the end of the year by when most installations will be completed. A narrow spread between HSFO and IMO-compliant fuels will probably discourage future scrubber installations.

 

Front Month Price index

LNG Risavika*

LBG blend

Risavika**

FO 3.5 FOB Rdam

MFO 0.5 FOB Rdam

MGO 0.1 FOB ARA

ULSD FOB ARA

Unit

29.85

32.85

20.28

25.35

28.50

30.34

EUR/MWh

505.59

556.41

282.93

369.28

415.10

423.20

USD/t

 

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

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Source: CME Group, Gasum, Argus Media

*An estimate for LNG FOB Risavika 

** An estimate for 10 % LBG blend FOB Risavika