The New Orleans MGO discount to the same product in Houston reached its widest point Tuesday in more than seven weeks amid fierce supplier competition and an environment with poor supply and demand fundamentals, market sources said Tuesday.
New Orleans MGO was assessed at $488/mt ex-wharf, a $20/mt discount to the same product at the competing port of Houston. The discount was last wider February 17, when it was $21/mt, S&P Global Platts data showed.
"Demand has been just terrible lately. Everybody is hurting," said one bunker trader.
Suppliers compete intensely to consistently move their bunker fuel and poor demand can exacerbate the situation.
"Suppliers are attacking each other," a second bunker trader said.
New Orleans MGO historically traded at a premium to Houston until June 1, 2016, when it suddenly flipped.
Since June 1, 2016, New Orleans MGO has traded at a premium to Houston only 19 times out of 217 trading days, or approximately 8.76% of the time, which means it has been at a discount for about 91.25% of the time, Platts data showed.
The New Orleans-Houston MGO spread has been volatile since February 17 as New Orleans traded at a premium to Houston for 16 out of 37 trading days, or approximately 43% of the time, Platts data showed.
New Orleans reached a $30/mt premium on March 10, which was the largest premium since January 13, 2016, when it was $40/mt, according to Platts data.
