Highlights Marine fuel supply tightness to last into 2022 Wide Hi-5 spread incentivizes scrubber installation Record LNG prices drive high sulfur fuel oil consumption Rising refinery costs impact feedstock demand Tightness in the European fuel oil markets will persist into Q1 2022 , as high prompt demand looks set to weigh on availability.
The 0.5%S marine fuel forward curve is currently showing a sharp price drop between January and February 2022 to give a $6.5 backwardated structure. This structure is maintained further down the curve, with a $4.75/mt backwardation between February and March and refineries will be seeking to capitalize on this high prompt demand. “You have [the] Sines [refinery] still out, and some of the refineries in NWE only recently started producing [VLSFO] again,” commented one trader. “I think all of those [refineries] that […]