Russian domestic fuel oil prices gained over Rb1,000/mt ($36/mt) during the course of this week boosted by an uptick of demand and export prices being higher than the domestic ones, market sources said.
In Moscow, fuel oil traded at Rb11,900/mt, up from levels around Rb10,500/mt a week ago, sources said. In Ufa, fuel oil was heard offered around Rb8,000/mt, compared to levels previously discussed in the Rb6,500-6,700/mt range, according to sources.
Demand has been picking up as "power companies are stocking," said one source. Power companies had been issuing buy-tenders for August delivery over the past week while preparing for the upcoming heating season, sources said.
"We will see demand getting back to normal towards mid-August," said a source.
The export alternative was also deemed more attractive than domestic prices with many producers said to be opting for the export markets. "Loadings [on the domestic market] are slow as everything goes for exports," said a source.
The export netback was estimated to surpass the current domestic prices by over Rb1,000/mt, according to sources.
Fuel oil prices have also been tracking the levels of domestic crude for August delivery, which were Rb3,000/mt higher compared to last month, sources said.
Further adding to the bullish sentiment has been reports of refinery turnarounds for August and September, sources said.
"We are seeing the start of scheduled maintenance in August and September," said a source, adding that as a result product availability could tighten and prices firm.
