US Gulf Coast high sulfur residual fuel oil was assessed this week at its widest discount in more than 15 months to Balboa, Panama, high sulfur bunker fuel, on worries of a temporary supply shortage in the Central American country because of export delays out of the Houston-Galveston area.
Gulf Coast 3%S fuel oil was assessed at $87.98/barrel Tuesday, which was $9.66/b less than the Balboa high sulfur bunker fuel assessment.
That is the widest discount since December 10, 2012, when Gulf Coast 3%S fuel oil fell to $9.92/b less than Balboa 380 CST 3.5% bunker fuel.
Since 2010, the Gulf Coast discount to Balboa has averaged $5.60/b, Platts data show.
Panama prices jumped $6/mt Tuesday as market sources said possible export delays due to an oil spill in the Houston Ship Channel could cause a supply shortage in the Central American ports. Panama is a major importer of products from the US Gulf Coast.
"Supplies are very tight in Balboa as suppliers are still waiting a supplier tanker from Houston," a trader said Tuesday.
A weekend collision between two vessels spilled 168,000 gallons of bunker fuel into the waterway, which had limited ship movements into and out of the channel until Tuesday afternoon.
Vessels were allowed to exit the Houston Ship Channel, but inbound ships are still unable to enter the key waterway, a US Coast Guard official said Tuesday.
Panama imported roughly 34,000 b/d of residual fuel from the US in 2013, just shy of 10% of total US exports during the year, according to US Energy Information Administration data.
Fuel oil swaps traders said that because the closing of the Houston Ship Channel would only be a temporary issue, it has not made any notable impact on prices. One fuel oil trader said the overall lackluster bunker demand in the US Gulf Coast, along with a lack of arbitrage opportunities to Singapore, has resulted in the bearish outlook.
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