Residual fuel oil prices in the US relative to the underlying crude market were assessed Wednesday at their narrowest levels in several years, data showed.
Bidding interest for USAC 3%S fuel oil pushed up the price of the assessment to $50.85/b, its highest level since it was assessed at $50.94/b in June 2015.
The discount of USAC 3%S fuel oil to the front-month ICE Brent futures contract was assessed at $5.62/b. The discount was last narrower in February 2010, S&P Global Platts data showed.
USGC HSFO Wednesday was assessed at $48.10/b, or around 85% of the price of the front-month ICE Brent futures contract. It was the highest percentage for USGC HSFO relative to crude since February 2015. USGC HSFO was also assessed at its highest since July 2015.
The narrowing spreads sources said have largely been a result of narrowing spreads in Asia and Europe, which tend to have more pull on global fuel oil market fundamentals.
While US fuel oil sources said supply availability has been tight, there has not been a noticeable uptick in demand locally in the US Atlantic and Gulf coasts.
One USAC broker Wednesday said while demand is consistent, large cargoes of fuel oil will typically avoid the USAC, which tends to take smaller amounts of fuel oil for their limited demand.
