Viewpoint: European HSFO prices to remain supported

Viewpoint: European HSFO prices to remain supported

London, 22 December (Argus) — European high-sulphur fuel oil (HSFO) prices will continue to find support from US and northwest European refinery demand in 2022, as well as from shipping and power consumption, after discounts to crude remained wide enough to attract traders' buying interest in 2021.

Refiners with more complex refineries in the US Gulf coast and the Amsterdam-Rotterdam-Antwerp (ARA) trading and refining hub have continued to buy steady amounts of high-sulphur residuals from Russia for their cokers to increase diesel output, which contributed to support HSFO prices. Some refiners are likely to continue buying high-sulphur residuals from the Baltics, as heavy and sour crude output might be limited going into next year because of Opec+ supply cuts. Some US refiners typically buy Russian fuel oil to blend with shale crude in order to process in cokers, making the residual product a substitute for heavy crude.