Fuel Oil Spread at 11-Month High on Limited Supplies, JBC Says

The premium of low-sulfur fuel oil over its higher sulfur equivalent is at its highest level in 11 months because of limited supplies in northwest Europe, according to JBC Energy GmbH.

“Despite the overall more bearish sentiment in fuel oil markets amid quickly rising crude outright prices, low-sulfur fuel oil remains supported from tight supplies and lower refinery runs curbing supplies,” David Wech, an analyst at Vienna-based JBC Energy said in an e-mailed report today. “Upbeat demand from Japan might also be a supporting factor.”

This lack of low-sulfur fuel oil supplies in Europe has been contrasted by declining demand for high-sulfur after the initial shortage of the product in Singapore at the start of the year has eased, JBC said, without citing any price levels.

Fuel oil barges with 1 percent sulfur in the Amsterdam- Rotterdam-Antwerp traded yesterday at $54.50 a metric ton more than 3.5 percent barges, according to data compiled by Bloomberg. That’s the widest spread since July 6.

Rising crude prices have led to asphalt, a product made from residues, jump to its highest level in Rotterdam since at least September 2009, according to JBC Energy.

“Prices were supported by a string of factors including the boost in the crude flat price in recent weeks as well as refinery shutdowns on both sides of the Atlantic limiting availability,” Wech said. “In Europe, Petroplus’s Ingolstadt and Petit Couronne plants produced significant quantities of the heavy product while supplies of suitable heavy-sour feedstock also tightened following an embargo on the import of Syrian Heavy.”

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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