Ship Fuel Supply May Rise as Virus Hits Other Oil Products
The demand destruction in transportation fuels caused by the coronavirus pandemic is providing an incentive to produce more IMO 2020-compliant ship fuel, according to a report from Energy Aspects dated April 30.
Decline in jet fuel demand could easily push up diesel yields by 1-2 ppts, exacerbating the global oversupply in diesel molecules
“The obvious solution is to shift some diesel molecules into the VLSFO pool to keep diesel yields in check”
NOTE: VLSFO is a new 0.5% sulfur marine fuel designed to comply with the IMO 2020 cap
Meanwhile, the collapse in gasoline values in Asian markets because of the virus-driven demand slump has prompted refineries there to shift gasoline feedstock back into the VLSFO pool
“VLSFO will remain under pressure as excess clean molecules and VGO are diverted into the blending pool, while HSFO prices will continue to be guided by supply tightness, amplified by the lack of heavy crude grades”
