(S&P Global Platts, 18.Oct.2018) — Brazil’s Petrobras is offering 50,000 mt of 0.6% cracked low sulfur fuel oil from Brazil for delivery into Europe during the first decade of November, fuel oil traders said Thursday.
The cargo from Petrobras, Brazil’s biggest refiner, is not good news for European LSFO after a period of steady demand in the Mediterranean, as this additional cargo will add length in Europe.
“This is the last thing we want in Europe,” a fuel oil trader said.
The LSFO market tightened through September and early October as the Mediterranean continued to demand 1% fuel oil for utilities, but traders expect this to soften in the coming weeks as the extended summer air-conditioning demand dips.
“The market seems oversupplied now, all the key refineries are coming back from maintenance, the summer demand is gone,” a second fuel oil trader said.
The 0.6% sulfur Petrobras cargo will likely go into the blending pool, and a possible destination could be the Algeciras blending hub, a source said.
Last winter, the European LSFO market benefited from some additional non-EU demand from Brazil’s Petrobras to fulfill a shortfall in requirements due to a drought. This combined with maintenance at a key LNG import facility necessitated oil imports for power generation as Brazil’s 70% of electricity is hydropower.
Petrobras could not be reached for comment to confirm the cargo or the purpose of the export.