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ENGINE: Europe & Africa Bunker Fuel Availability Outlook

VLSFO has been tight for prompt deliveries in ARA ports in the past week, and its prices have been supported by persistently low European refinery runs.

ARA’s independent fuel oil inventories, which include both low and high sulphur grades, have been declining for two weeks, but remain above their five-year average. VLSFO has gotten tighter in ARA recently amid persistent run cuts at regional refineries and a slowdown in fuel oil import volumes from Russian Baltic Sea ports. Russian fuel oil is imported to ARA and generally either sold as HSFO, blended into VLSFO, or built to larger cargoes bound for Singapore or other destinations.

Arbitrage demand from the east pulled fuel oil cargoes from ARA and other European ports last month, and lifted European VLSFO refining margins to multi-month highs in the last week of February. Asian utilities increasingly sough fuel oil cargoes to power their plants, after LNG prices spiked during the region’s cold snap at the beginning of the year. Demand from the east slowed toward the end of February, and reduced fuel oil export demand from ARA.

Higher demand for European refinery products could have yielded more fuel oil as a by-product. European road fuel demand got a boost from transatlantic demand two weeks ago, when the winter storm in Texas and the Permian Basin shut several US refineries for days. But the production increase could be short-lived as the Europe’s aviation and road fuel demand remains muted by Covid-19 restrictions on people’s movement.

HSFO380 stems are still available for prompt deliveries with around three days required in ARA and Gibraltar Strait ports, which is significantly shorter than in other bunker hubs such as Fujairah and Singapore.

VLSFO and LSMGO are also in good supply in Gibraltar Strait ports, but deliveries have been delayed by port closures and restricted bunkering this week. Rough weather suspended anchorage bunkering in Gibraltar on Monday and again on Wednesday afternoon, port agency MH Bland reported.

Gibraltar’s bunker suppliers were able to clear most of their delivery backlogs from Monday, before the weather worsened again on Wednesday. There were nine vessels waiting to bunker on Wednesday afternoon, up from six earlier in the day, according to MH Bland. Congestion peaked at 23 vessels on Monday.

Bunker operations were limited to inner anchorage in Algeciras on Wednesday, and bunker suppliers were delayed by around a day.
HSFO continues to be tight in the Canary Islands and South African ports, leaving fewer options for prompt supply of HSFO380 and HSFO180 around the African coast. Port Louis and Cape Town have no availability of the high sulphur grade. Resupply is not expected in the Canary Islands until next month.

VLSFO and LSMGO are more readily available for supply in Canary Islands and South African ports. High swell is forecast on in both Las Palmas and Port Elizabeth from Saturday and could disrupt bunkering then.
Source: ENGINE (https://engine.online/)

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