OPEC Helps Oil Refiners' Least-Loved Product Surge
- OPEC cuts predominantly impacting higher sulfur sour crude
- That means less supply of heavy fuels used for shipping, power
All hail fuel oil, historically the cheapest, dirtiest and least-loved thing to come out of refineries. Thank crude output cuts by OPEC and its allies for the surprise ascendance of the product used to power ships and generate electricity.
OPEC’s influence on the oil market is perhaps most apparent in the market for types of crude that yield a lot of the fuel oil, normally the cheapest thing refineries make. The price difference has collapsed between high-quality North Sea crude, popular for making products like gasoline, and key Middle East grades that churn out more fuel oil in the refining process. The so-called crack spread for fuel oil, a measure of refining profit, has surged to the highest for the time of the year since at least 2010 in the U.S., according to fair-value data compiled by Bloomberg.