• Bunker purchases complicated by mass volatility and sanctions
• US fuel oil inventories tick up before sanctions kick in
• Prompt fuel tight in multiple Caribbean and South American ports
Certain suppliers have been hesitant to offer stems in the US Gulf Coast region before they have ruled out majority Russian ownership of vessels, chartering and trading firms involved when fixing stems. The extra due diligence can delay the purchasing process some.
Massive volatility continues to create a difficult pricing environment. Suppliers typically offer firm prices with less than 15-minute validity before reoffering, and price offers can vary greatly between suppliers for the same fuel grade.
Some suppliers have been reluctant to indicate prices before firm enquiries are put forward, limiting the number of price points available.
Bunker availability is tight for prompt dates in the Houston area, where several suppliers’ earliest delivery dates are eight days ahead.
US fuel oil inventories have regained some weight after slumping to near all-time lows a month ago, the latest EIA figures showed this week. The country’s total stocks of residual fuel oil were helped by builds on the East Coast and Gulf Coast in the week to 4 March, while West Coast stocks have held almost unchanged.
US fuel oil inventories remain below their five-year average position at a time when US sanctions on Russian crude and oil products are about to come into effect.
The embargo announced by President Joe Biden this week is set to kick in 45 days after it is signed into law. The US House of Representatives voted overwhelmingly in favour of banning Russian oil imports on Wednesday, a day after Biden’s announcement.
New oil purchases will stop immediately, but US importers have 45 days to complete deliveries.
The embargo is set to have massive repercussions for fuel oil inflows to the US. About a third of fuel oil import volumes that have arrived in US ports so far this year, or is due to arrive by the end of March, have been shipped from Russia, according to cargo tracker Vortexa.
The vast majority of these Imports are HSFO (91%) and have mostly departed from Russian ports in the Baltic Sea (70%) and Black Sea (26%).
Almost all of it land on the US Gulf Coast, with the three ports of Good Hope near New Orleans, Houston and Corpus Christi taking around three-quarters of it.
Russian fuel oil is imported to feed complex US refineries that use coker units to upgrade residuals to higher-value distillates like diesel. Other major outlets for imported and domestically produced fuel oil are US and regional bunker ports.
US importers will either need to source more fuel oil from its other top fuel oil sources like Mexico (30%) and Algeria (3%), and low sulphur fuel oil from Brazil, or find alternative sources to make up the import shortfall from places like Iraq.
Fuel availability is already tight across major Central American and Caribbean ports, many of which depend on imports from the US and could feel the pinch if there is less fuel oil available in the US in the months to come.
Bunker schedules are filling up fast in Balboa, even for a week and further out. Prompt VLSFO and LSMGO is still possible to find in Balboa, but at price premiums.
A supplier in Trinidad has been running low on product in wait for resupply. Deliveries off Trinidad have also been delayed by rough weather and choppy seas this week. The earliest delivery dates range between 9-10 days off Trinidad, compared to seven days in port.
The earliest date in Curacao is 11 days out.
VLSFO supply has been tightening for prompt dates at the Argentinian Zona Comun anchorage. Suppliers’ earliest delivery dates range between 6-9 days to 13-14 days. One supplier is not offering while its barge is in dry dock.
Source: ENGINE (https://engine.online/)