Shippers beware: oil refineries are starting to eradicate stockpiles of sulfur-rich fuel that powers the merchant fleet in anticipation of a demand collapse in fewer than 18 months.
Stockpiles have slumped in the U.S. and Singapore this year and traders directly involved in buying and selling the fuel say some refineries already started to trim output in anticipation of rules that will severely restrict consumption from Jan. 1, 2020
“It’s literally the perfect storm,” Nevyn Nah, a Singapore-based analyst at Energy Aspects, said of diminishing stockpiles. “Any fuel oil blender whose lease / storage lease is going to expire now will not be renewing it because of the backwardation.” That will limit the industry’s ability to produce suitable marine fuel, he said.
Read the full article here