U.S. refiners are scooping up cheap high-sulfur fuel oil for processing from Rus...
) have been buying HSFO, traders said, taking advantage of their complex operations to turn HSFO blended with crude oils into products like diesel, gasoil and gasoline.
New maritime rules known as IMO 2020 mandate that the shipping industry has to burn cleaner, low sulfur fuels in tankers. The rules, which took effect Jan. 1, have clipped demand for marine fuels such as high-sulfur fuel oil. The surplus marine fuel is becoming a salve for refiners, according to traders, who have seen margins drop sharply due to weak global demand for refined products like diesel and gasoline.HSFO sold for $39.55 per barrel on the U.S.
Refiners are buying HSFO to replace the loss of crudes from Venezuela and Iran that have been barred by U.S. sanctions, and traders said they see an opportunity for big margins on products refined using HSFO, even though such a blend yields fewer barrels than processing crude oil into products. “The yields aren’t quite as good, but right now, with Maya crude at a $10 discount to Brent, are getting a $13 head start,” said Matthew Blair, a Tudor Pickering refining analyst. The yield, or percent of oil that can be converted to diesel or gasoline, affects a refiner’s profit.
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