Heating Oil Prices

UPDATED 2020 PRICES

FUEL OIL PRICES | CST180 / CST380

The companies awarded quotas are Sinopec, PetroChina, Sinochem, CNOOC and Zhejiang Petroleum & Chemical. The move indicates fuel oil has become a restricted product for export, with state-owned Sinopec awarded 4.29 million mt, PetroChina and Sinochem allocated 2.95 million mt and 900,000 mt, respectively, and 860,000 mt to CNOOC.

The remaining 1 million mt was awarded to independent refiner Zhejiang Petroleum & Chemical. Before the quota allocation, a few domestic producers supplied fuel oil for bonded bunkering to take advantage of a recent tax-rebate policy without any volume or license restriction.

In tender news, Sri Lanka’s Ceylon Petroleum Corp or Ceypetco issued a buy tender seeking 30,000 mt of fuel oil for delivery on May 20-21, according to the tender document. The company is seeking 30,000 mt of either 0.5% sulfur cargo or 1.8% sulfur cargo, but with a viscosity of 180 cst for both options. The fuel oil is typically consumed at power plants.

The market structure of Singapore fuel oil has improved since April mainly following the crude oil structure, while supply remained ample, said traders Friday. “Fundamentals in fuel oil market are not strong,” said a Singapore-based trader.

The Singapore Marine Fuel 0.5%S June/July spread was pegged at minus $6.50/mt Friday, unchanged from Wednesday, when the inverted structure was the widest since March 25.

The 0.5%S marine fuel grade is expected to remain well supplied as gasoline prices stayed lower than 0.5%S marine fuel, even though the gasoline market has improved recently, said sources. The Singapore June 90 RON gasoline/Dubai swaps spread was assessed at minus $1.43/b Wednesday, while the 0.5%S marine fuel/Dubai spread was assessed at plus $7.53/b. “VGO [vacuum gasoil] is still going into LSFO [low sulfur fuel oil] blending pool, given the current gasoline market,” said a refining source in north Asia.

Meanwhile, Singapore’s commercial onshore residue stocks gained 8.7% week on week at 24.136 million barrels, or 3.8 million mt, over April 30-May 5 amid higher imports, showed the latest Enterprise Singapore data released Wednesday. The stocks rebounded after they declined for two weeks in a row. After falling to the lowest level in four weeks in the week of April 23-29, Singapore’s fuel oil imports registered a strong 30.9% increase at 739,739 mt, according to Enterprise Singapore data on weekly fuel oil numbers. While the first week of May saw fuel oil imports climb, fuel oil traders expect the import would decline in the whole of May from April because of higher freight rates and relatively weak Asian fuel oil prices.

Fuel oil exports also continued their decline from the previous week, contributing to the stocks build. The exports registered a 41.4% fall from the week before at 137,785 mt.

While overall bunker demand in Asia has been coming back since late April, market sources in Singapore said demand for low sulfur bunker fuel was softer week on week due to the Labor Day and Vesak public holidays. “There are still inquiries coming in but in general, I think shipowners are already well-stocked so they are not really fixing deals,” said a Singapore-based bunker trader.

 

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China’s current Fuel Oil Spot Prices in the second week of May 2020 were at 3650.00 RMB per MT.

 

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At the below chart you can see the Russian Fuel Oil Producer Prices, the last update is March 2020.

 

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HEATING OIL PRICES | THE YEAR 2020

SINGAPORE FUEL OIL PRICES:

FOB Singapore ($/MT)				Premium / Discount
	Price	Mid	Change	Price	Mid	Change
FO 180 CST 2%	150.81–150.85	150.830	-8.670
HSFO 180 CST	147.49–147.53	147.510	-8.480	-9.50/-9.46	-9.480	0.000
HSFO 380 CST	137.51–137.55	137.530	-11.320	-15.02/-14.98	-15.000	-2.820
Marine Fuel 0.5%		224.890	-8.040		-5.260	+4.150

 

MIDDLE EAST FUEL OIL PRICES:

FOB Arab Gulf ($/MT)				Premium / Discount
	Price	Mid	Change	Price	Mid	Change
HSFO 180 CST	126.36–126.40	126.380	-7.730	3.98/4.02	4.000	+2.000
HSFO 380 CST	116.38–116.42	116.400	-10.570	1.98/2.02	2.000	+1.000
HSFO 180/380 spread	-10.00/-9.96	-9.980	-2.840
Marine Fuel 0.5% Fujairah					-9.000	+3.000

 

MIDDLE EAST FUEL OIL PRICES:

FOB Fujairah ($/MT)			MOPAG Strip
	Mid	Change	Mid	Change
HSFO 380 CST	121.010	-8.230	137.010	-8.230
Ex-Wharf 380 CST	127.070	-8.620	130.070	-9.620
Marine Fuel 0.5%	204.860	-8.610

CHINA/ HONG KONG FUEL OIL PRICES:

Hong Kong Bunker Grades ($/MT)
	Price	Mid	Change
HSFO 180 CST	185.50–186.50	186.000	-9.000
HSFO 380 CST	179.50–180.50	180.000	-10.000

JAPAN FUEL OIL PRICES:

C+F Japan ($/MT)			Premium / Discount
	Price	Change	Price	Change
HSFO 180 CST	166.04–166.08	-9.170

SOUTH KOREA FUEL OIL PRICES:

FOB Korea ($/MT)			Premium / Discount
	Price	Change	Price	Change
HSFO 180 CST 3.5%	153.47–153.51	-8.480	-3.75/-3.25	0.000
HSFO 380 CST 3.5%	143.49–143.53	-11.320	-3.75/-3.25	0.000

FUEL OIL PRICES | THE YEAR 2020

MEDITERRANEAN FUEL OIL PRICES:

FOB Italy ($/MT)				CIF (Genova / Lavera)
	Price	Mid	Change	Price	Mid	Change
1%	155.00–155.50	155.250	+4.000	175.25–175.75	175.500	+3.750
3.5%	114.00–114.50	114.250	+6.500	134.25–134.75	134.500	+6.500

 

NORTHWEST EUROPE FUELOIL CARGO PRICES:

CIF Basis ARA ($/MT)				FOB NWE ($/MT)
	Price	Mid	Change	Price	Mid	Change
1%	167.00–167.50	167.250	+6.750	157.25–157.75	157.500	+9.500
3.5%	117.75–118.25	118.000	+2.750	104.00–104.50	104.250	+6.500

 

NORTHWEST EUROPE FUEL OIL BARGES PRICES:

FOB Rotterdam
	Price	Mid	Change
1%	152.25–152.75	152.500	+9.500
3.5%	122.00–122.50	122.250	+2.750
Fuel Oil 3.5% 500 CST	118.00–118.50	118.250	+2.750
Rotterdam Bunker
	Price	Mid	Change
380 CST	151.50–152.50	152.000	+6.000

 

FUEL OIL PRICE TRENDS

Heating Oil Outlook

The global Diesel market is valued at 931500 million USD in 2020 is expected to reach 1246400 million USD by the end of 2026, growing at a CAGR of 4.2% during 2021-2026.

The share of diesel fuel in the transportation sector is expected to grow up to 32–35 percent by 2025 owing to improved economic growth and trade in the emerging and developing nations, leading to significant growth of the commercial transportation sector. APAC has the largest diesel consumption followed by Europe and North America. Buyers at present, have relatively higher bargaining power in the diesel fuel market.

Having high energy density per unit volume, diesel is preferred in markets such as commercial heavy-duty vehicles, power generation, and in various other industrial applications for its high energy/thermal efficiency. Growing demand in heavy transport sector especially in emerging economies like China, India, Brazil, and Indonesia drives the demand for diesel fuel

By imposing “Clean Air Zones”, Governments around the world have put some restrictions to drive diesel vehicles. Increasing usage of alternative fuel vehicles, such as Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) vehicles could hamper the diesel fuel market.

Biofuels procurement intelligence shows that in large volume sourcing, the buyers look for companies that can scale up quickly and can store large inventories. Alternative fuels like CNG, LPG and biofuels do pose a threat, but the level of threat is relatively low as their penetration is slow.

Crude oil prices are the main driver of retail fuel prices in the long-run (months and years). In the short run, exchange rates, tax policy, regulations, supply disruptions, and seasonal factors also play a role but these influences are minor compared to crude oil.

 

Diesel Fuel – Global Industry Outlook

The Global product demand for Diesel is forecasted to reach ~27 Mbpd by 2020.

Global demand for liquid fuel is expected to reach 100 million barrels/day (Mbpd) by 2019 (1.21 percent CAGR). Share of diesel fuel in the transportation sector is expected to grow from 30 – 32percent in 2016 to 32 – 35 percent by 2025. Developing nations’ higher demand for power and the inability of the existing infrastructure to reduce the demand is resulting in the growth of diesel generators industry at ~5 – 6 percent

The growth in demand for diesel will be moderate in North America and Europe but will increase drastically in APAC, accelerated mainly by the increase of commercial vehicles, especially in India and other South Asian Countries

Increasing concerns over carbon dioxide emissions and fuel efficiency has resulted in stricter regulation on fuels. Ability of the diesel fuel to reduce emissions as well as improve fuel efficiency is resulting in its higher demand. According to diesel intelligence, the demand for Diesel by end-use industries in 2018 was Road 60%, Residential/Commercial/Agriculture 15%, Electricity Generation 8%, Rail and Domestic Waterways 5%, Marine Bunkers 4%, and Other Industry.

Buyer is better placed during negotiations mainly because of supply exceeding the demand volumes in the diesel market, which has had an impact on the price of diesel. Prices have dipped at double digits over the last few years.

 

Diesel Fuel – North America Market Outlook

The diesel demand forecast suggests that market demand in the North American region is estimated to be 4.4 million barrels/day in 2018. The US and Canada together had a demand of 4.51 mb/d.

Every 10 percent change in oil prices leads to about 3 percent change in fuel prices in Europe and about 7 percent change in the U.S. In principle, the higher the fuel taxes, the smaller the change in fuel prices for a given change in oil prices. These numbers are the same for gasoline and diesel. So, if you are in a country with high fuel prices (see the global rankings for gasoline and diesel), an increase/decrease in oil prices from, say, 60 to 70 USD per barrel would lead to about 5 percent increase/decrease in fuel prices. If you are in a country with about average fuel prices, the change would be double – about 10 percent. If you are in a country with low fuel prices, that usually means that the government regulates or subsidizes prices. Then, oil prices have less direct impact but eventually policies adjust and fuel prices come in line with the crude oil prices.