MGO lower their prices further, as markets flood with excess supply of fuel
IMOs regulation on low sulfur fuel stipulates vessels can burn fuels with a sulfur content no higher than 0.10%. Therefore, dependency on Marine gas oil (MGO) is an expensive yet most suitable alternative for ship operators. This comes at a time of opportune collapse in oil prices; that have actually helped neutralize the cost impact of the low-sulfur fuel in the shipping industry.
A price log comparison with July last year shows MGO’s average prices prevailed at $975.00 pmt in comparison to $531.00 pmt on Tuesday, 28th July 2015. Vessels will have to procure fuel from MGO to comply with the new emission standards, as not all vessels come equipped with scrubbers found in cruise vessels. Thus, the MGO’s production level rose in expectation of further demand for the new low Sulfur fuel.
The situation has resulted in the market being choked with excess product. The current situation depicts supply outpacing demand.