The widening difference between the price of diesel fuel and the price of Brent crude oil suggests that energy markets are worried about the impact of upcoming maritime fuel regulations.....MUCH MORE
There’s a great deal of noise and many opinions about what effect the new maritime fuel regulation, IMO 2020, will have on the price of diesel fuel when it goes into effect January 1, 2020. The regulation mandates that commercial vessels use fuel that contains a maximum sulfur content of 0.5%, far less than the current allowed level of 3.5%.
Purchasers of ultra low sulfur diesel, which include trucking carriers and, because of fuel surcharges, shippers, are concerned that the demand for ultra low sulfur marine fuels will tighten refinery capacity and drive up the price of diesel. The possibility that some vessels will install scrubbing technology that allows them to continue using the old bunker fuel – so far about 6% of vessels have installed or have stated an intention to install scrubbers – further complicates any forecasts about IMO 2020 impacts.
Energy markets may be a better way to get a read on what the industry expects because traders are voting with their dollars, and by at least one measure there seems to be anxiety in the markets about potentially tightening diesel supply going forward.
The diesel crack spread, or the difference between the price of diesel as represented by gasoil contracts on the New York Mercantile Exchange and the price of Brent crude, the international benchmark, has widened considerably, to its widest level so far this year....
Out of our dozens of links on IMO 2020 a few that may be of interest:
August 25
Shipping Magnate John Fredriksen Goes ‘All-In’ With IMO 2020 Wager (FRO)
August 21
Shipping/Trucking: "Diesel prices will spike due to IMO 2020: Fitch"
August 6
Shipping/Refining: "Is A Diesel Crunch Coming?"
July 12
Shipping: First Signs of 2020 Low-Sulpher Rules Starting to Rock the Oil Market
Have I mentioned the IMO 2020.... oh who am I kidding, fascination became idée fixe some time ago.
July 8
Shipping: 2020 Low Sulphur Rules Less Than 6-Months Away - There's A Trade For That
And previously on this aspect of the big change:
Rich Rewards Await Top Oil Refiners as Ships Make Low Sulphur Switch Fuel
Top Norwegian Oil Analyst Quitting DNB to Pursue 2020 Low Sulphur Fuel Rule Riches
Shipping: The New Low Sulpher Rules Will Have A Huge Impact On the Oil Business (shipping and world economy too)
Oil/Shipping: "Where will all the residual fuel go after ships barred from using it?"
Shipping’s 2020 Low Sulphur Fuel Regulation to Hit Airlines
"Shipping: 2020 Low Sulfur Fuel Requirements Will Disrupt Oil/Refined Markets Up to Five Years". Shipping: First Signs of 2020 Low-Sulpher Rules Starting to Rock the Oil Market
