Bunker markets have seen extreme price volatility this year. File Image / Pixabay
Premiums for very low sulfur fuel oil (VLSFO) over crude prices are likely to widen in the coming months as demand for other refined products recovers, according to trading company Integr8 Fuels.
As countries ease lockdown measures, demand for refined products is likely to rally -- and this is likely to raise prices for some of the blending components used to make VLSFO, Integr8 said in a research note Monday.
"The nature of VLSFO typically as a blend means that as demand for gasoil/diesel, jet and gasoline increases, so the price of these products relative to crude will rise and this will also 'pull-up' the relative price of VLSFO to crude," the company said.
"We could expect VLSFO prices to increase by even more, not back to the 130% plus levels to Brent, but certainly higher than the present 102%."
The VLSFO price in Singapore was about 107.4% of the Brent crude price on Friday, according to Ship & Bunker pricing.