Australia's Vincent crude touches record premiums on firm LSFO market

Singapore — Spot premiums of Australia's Vincent crude have reached record levels for January-loading cargoes on the back of a stronger marine fuel low sulfur market, market sources said.

Vincent crude, which has an API gravity of 18-19, was heard to have traded at premiums of between $8.50-$9/b to Platts Dated Brent crude assessments, FOB for January-loading cargoes, up from high-$7s/b heard traded for December-loading barrels last month, S&P Global Platts data showed.

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The spot premiums for the January cargoes are the highest-ever achieved by the crude since its quality was adjusted to make it suitable for blending into low sulfur fuel oil, the sources said.

The record premiums came on the back of stronger values seen in the marine fuel oil 0.5% sulfur market, which itself has been supported by stronger gasoil prices. Some marine fuel 0.5%S trades are still linked to gasoil prices, sources said.

The Asian gasoil market has strengthened in recent weeks as demand improves gradually and supply tightens due to refinery run cuts that have reduced the availability of resupply volumes in the region.

Meanwhile, demand and supply fundamentals of marine fuel 0.5%S has been largely balanced to slightly tight due to a relatively low inflow of arbitrage cargoes from the West.

The crack spread between Singapore December marine fuel 0.5%S and Dubai crude swaps averaged $10.03/mt over Nov. 2-25, up from the October average of $8.75/mt, Platts data showed.

FUEL OIL BLENDING

Vincent crude had first caught the attention of fuel oil players in the middle of the year, when a July-loading cargo was heard sold at a premium of high-$5/b to Dated Brent, much higher than the $2/b discount traded for June-loading cargoes the prior month, Platts data showed.

Market sources had then indicated that the flash point of the crude had been improved to make it blender friendly.

Operator Woodside had said in June that the crude "is already very well suited to the fuel oil blending market but we are making adjustments to ensure the grade's competitiveness in this premium-priced segment."

Woodside holds a 60% stake in the Greater Enfield project, with the remaining 40% held by Mitsui E&P Australia.