The cost of shipping fuel oil from Northwest Europe to Singapore is back to levels seen in November 2007.
The cost of shipping fuel oil from Northwest Europe to Singapore is back to levels seen in November 2007, say market sources.According to the energy news provider Platts, the price of shipping the product has fallen to $13.89 per metric tonne (pmt). The figure was calculated from reports of a fixture set for loading on February 25. Rates for very large rude carriers (VLCCs) have been falling in the face of the global economic downturn.
But even with the fall in transport costs, market sources quoted by Platts doubted there would be a surge in arbitrage cargoes out of Europe .
"The economics are marginal at best," said one.
Another said: "Lots of oil is arriving East in the following weeks. The question is, would they want anymore?"
Meanwhile, other reports say Asian fuel oil demand has been weakening, with regional bunker demand soft and with high stockpiles in China weighing on sentiment.
Western arbitrage cargoes to Asia in February are expected to decline to between 2.7 million to 2.9 million mt, down from some 3.5 million mt booked for arrival in January.
Singapore's onshore stocks of residual fuel were at a six-week high at 17.708 million barrels last week.