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Fuel Oil Prices Rise Sharply: Tank Tightness Pushes Demurrage Higher
Fuel oil futures surged sharply — largest one-day gain in 3 weeks; Brent fell -1.75% to $107.94, opening arbitrage window. East China bonded tank utilization is tight; Ningbo-Zhoushan demurrage has risen notably. Regional haulage breakeven threshold has accordingly moved higher. Major East China bonded oil terminals (Yangshan, Ningbo, Zhoushan) are experiencing tight tank availability. Four VLCCs carrying fuel oil have arrived but not secured immediate berthing, leading to markedly extended waiting times. Demurrage quotations have risen significantly from levels observed on October 12. Extended laytime + bonded transfer dual advantage. Price trigger for strategic shift: demurrage breaches conventional levels significantly, or fuel oil daily gain reaches a notable magnitude.
2026-10-19· 4 min· By: SNSUC Research Institute
The surge in fuel oil futures is not demand-driven — it’s physical bottleneck pricing. Bonded tank utilization across East China hubs (Yangshan, Ningbo, Zhoushan) is elevated, reflecting tight storage conditions. Multiple VLCC fuel oil cargoes arrived without immediate berthing, extending anchorage wait times. Demurrage has increased significantly, lifting transshipment cost substantially (at USD/CNY 6.6870). The Brent-to-fuel-oil RMB spread has widened beyond the historical arbitrage threshold, yet arbitrage is blocked by tank lock-up: importers refuse to discharge into full tanks and instead hold cargo onboard. Asphalt’s flat move confirms constrained residue diversion — domestic refineries can’t accept diluent asphalt due to saturated storage. Natural rubber (-0.23%) and BR (+0.19%) show no linkage to logistics stress. For SNSUC clients, the decisive variable is regional haulage economics: when inland waterway freight (Ningbo–Zhangjiagang) plus demurrage allocation breaches the economic threshold, route switching is mandatory. Immediate action: activate Zhoushan–Singapore reverse flow using idle ESPO crude transshipment capacity for fuel oil relay — capturing VAT deferral + bonded reconsignment benefits. Turnaround trigger: demurrage reaches a level that materially impairs logistics economics or fuel oil gains sharply accelerate.
