US Atlantic Coast high sulfur fuel oil hit multiple highs Thursday on repeated buying interest in the Platts Market on Close assessment process and dwindling supplies, sources said.
USAC 3%S fuel oil was assessed at $36.74/b, a discount of just $9.72/b to the front-month ICE Brent futures contract. The discount to the underlying crude market was last narrowed when it was $9.45/b on March 31, 2015, data showed. The USAC 3%S premium to USGC 3%S fuel oil also widened to $3.07/b, its largest since it was $3.11/b on March 6.
One USAC source said imports from Canada, which supplies the bulk of the USAC fuel oil market, have been of a quality that required higher-priced blending components for the fuel to be sold for bunkering purposes. The source said metals content and a high API content have all made blending a more costly endeavor.
Some suppliers have decided to import from Latin American countries, whose fuel oil output sources said is more consistent than it has been from local and Canadian refineries.
Multiple sources said the fuel imported from Latin America has been priced off of USGC HSFO prices, giving buyers a reason to bid paper and physical USAC HSFO prices in order to profit off the arbitrage.
While imports from Trinidad and Tobago and Colombia are scheduled to arrive sometime in July, US Energy Information Administration data showed USAC stocks hit their lowest levels since the end of May, and that no imports came into the USAC for the week ended Friday.
