Premiums for Colombia and Brazilian fuel oil barrels have increased recently due to a relatively weak New York Harbor 1% sulfur fuel oil benchmark, Latin American market fuel oil traders said Thursday.
"I think the New York 1% fuel oil market is currently under valued, so premiums to that benchmark are increasing to make up for that," one Latin American fuel oil market trader said.
Brazilian 0.6% sulfur fuel oil has been recently sold into Puerto Rico at a $6.00/barrel premium to Platts New York Harbor 1% sulfur fuel oil assessments, on a delivered into Yabucoa basis, according to a source familiar with that market.
Petrobras typically provides Shell with low sulfur fuel oil to be blended to fulfill a contract with Puerto Rican Electric Power Authority with 0.5% sulfur fuel oil for the utility's 25,000 b/d Aguirre power plant.
PREPA's 7.8 million barrels/year contract with Shell was renewed this year and, in March, Shell began delivering 60,000 barrels almost every two days into the Aguirre power plant on the island's southern coast, where logistics make delivery complex, according to market sources.
That contract was renewed at a $4.78/b premium to an average of Platts and Argus New York Harbor 0.7% and 0.3% sulfur fuel oil assessments for the day before, day of, and day after the bill of lading date, delivered.
Local oil company Petrowest holds a separate contract with PREPA for 9 million barrels/year of 0.5% sulfur fuel oil to be delivered to the utility's plants in San Juan and Palo Seco.
Petrowest is supplied by Switzerland-based oil trader Trafigura, according to sources. Puerto Rico consumes about 18 million barrels/year of 0.5% sulfur fuel oil.
In Colombia, 1.75% sulfur fuel oil has been called at about a $2.00/b discount to Platts US Gulf Coast 3% sulfur fuel oil assessments, on an FOB Mamonal basis, according to Caribbean fuel oil traders.
This places Colombian fuel oil at about a 15 cents/barrel premium to NYH 1% sulfur fuel oil, FOB, due to US Gulf Coast 3% sulfur fuel oil strength over New York 1% sulfur fuel oil weakness, according to Platts data.
Colombia's state-run oil company Ecopetrol was recently offering a 420,000-barrel cargo of 1.75% sulfur fuel oil to be loaded during the first of November, sources said.
PetroChina and Shell are among the recent buyers of that Colombian fuel oil grade, according to sources.
