Low sulphur fuels price on Wednesday (12 February) reached record lows in the market downtrend from the start of the year, as demands slowed down, as reported in Reuters.
In Singapore, front-month backwardation in the very low sulphur fuel oil (VLSFO) market fell from a record USD 22 a tonne on 20 January to USD 2 a tonne this week, while its refining margin fell to 2-1/2 month low of USD 16.35 a barrel above Brent crude, down from a record USD 29.35 at the start of 2020, Refinitiv Eikon data showed.
Trade sources have indicated that bunker fuel demands typically slows down during the Lunar New Year holiday however the spread of coronavirus in China has exacerbated the downturn period.
Reuters reported the cooling of low sulphur fuels price are also an early sign of stabilising market fundamentals after months of volatility due to the industry adoption of Marpol Annex VI rules by the International Marine Organization (IMO).
“Demand just isn’t there,” said Starfuels Dubai Oil Broker Matt Stanley, as quoted by the news agency.
“With China on lockdown really for all of Q1, demand is going to inevitably collapse.”
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