SINGAPORE (Reuters) – High sulfur fuel oil premiums in Asia surged to a record on Thursday, one of the first signs of the impact of a shift in global ship fuel rules set to occur in 2020. The premium for 380-centistoke (cst) high-sulfur fuel oil rose to $11.63 a ton above Singapore benchmark prices on Thursday, according to Reuters data. The surge is a result of a combination of factors. Companies reducing their holdings of high-sulfur fuel oil (HSFO) before lower sulfur mandates for ship fuel, known as bunkers, go into effect next year has caused a recent drop in HSFO inventories in Singapore, the world’s biggest bunker fuel port. At the same time, HSFO demand in the Middle East has soared to fuel power plants meeting increased cooling demand in the region. Fuel oil is a refining byproduct used primarily as a shipping fuel, with 380-cst the most common standard used on ships, and for power generation. “Singapore HSFO markets strengthened this week on higher regional demand from the Middle East and India,” said Nevyn Nah of energy consulting firm Energy Aspects. The surge also underscores the radical shift that is coming for global fuel oil markets. The International… continue reading
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