Last week was an historic one for crude volatility, but bunker prices have so far failed to follow suit.
Brent on Friday saw a week-on-week gain of over 38% to $34.11/bbl, and a massive 50% jump since it had sunk to $22.72/bbl just a few days earlier.
Bunkers, on the other hand, moved in the opposite direction.
VLSFO bunkers have yet to establish a clear relationship with crude
Ship & Bunker's key indices, the Global 4 (G4) and Global 20 (G20) ports averages, both softened over the week; the G4 VLSFO price to $252.50/mt Friday from $257.00/mt a week earlier, while the G20 VLSFO price Friday was $270.50/mt, down from $283.50/mt the previous Friday.
As the graph below indicates, VLSFO bunkers have yet to establish a clear relationship with crude - they are too new, pricing has so-far been impacted by additional logistics premiums during the IMO 2020 transition period, and the term VLSFO covers a range of products that may not necessarily be all comparable on price.
Exactly what the crude movements mean for bunker prices this week is difficult to say then, but unless crude makes a dramatic reversal Monday bunker prices are almost certainly heading upwards.
Friday's 5% premium for VLSFO over Brent was by far the lowest we have seen, and for Q1 2020 that premium has averaged 35%.
For guidance, a 35% premium on Friday's Brent price of $34.11/bbl would place VLSFO at 347/mt.