October Pricing Analysis - European Fuel Oil

Summary

HSFO 3.5% NWE FOB Barges averaged $614.70/mt in October, +11.0% MoM and +56.4% YoY, rising every week. VLSFO 0.5% averaged $677.53/mt (+5.9%) and 1% FO cargoes $626.15/mt (+7.7%). Unlike September, fuel oil gained on crude: Dated Brent slipped from $126.90/bbl on 1-Oct to $118.77/bbl on 30-Oct while the HSFO crack recovered from -$38.71/bbl to -$15.54/bbl. The pull came from Asia, where lower Middle East and Russian supply lifted Singapore 380 by 19.2% and drained Singapore stocks. Freight of $230/t kept European barrels from moving east, so ARA's HSFO discount to Singapore widened to -$161.95/mt and the European curve steepened (HSFO M1-M12 $141.75/mt). The Hi-Lo averaged $62.83/mt and stayed below $80/mt every day. Whether Russian fuel oil exports return after the 16-Oct US sanctions waiver is the trigger for HSFO in November.

Price trends

HSFO rose 11.0% MoM and gained every week, outpacing VLSFO by five points

• HSFO opened at $560.00 (1-Oct) and closed at $655.50 (30-Oct); low $552.75 (2-Oct), high $672.00 (26-Oct). September averaged $553.77.
• VLSFO opened at $631.25 and closed at its monthly high of $733.50 (30-Oct); low $611.75 (2-Oct). September averaged $639.49.
• 1% FO cargoes +60.4% YoY, closing at its high of $675.75 (30-Oct).
• VLSFO (+$34.00/mt) and 1% FO (+$29.50/mt) had their largest one-day gains on 8-Oct, when Dated Brent peaked at $135.66/bbl. HSFO's largest one-day gain came on 23-Oct (+$35.00/mt), when the Hi-Lo fell $20.75/mt in one session.

Cross-commodity dynamics

HSFO held while crude eased, lifting its crack $23.16/bbl; VLSFO stayed below crude

• Dated Brent averaged $125.00/bbl (+7.0% MoM) but fell from $135.66/bbl (8-Oct) to $118.77/bbl (30-Oct).
• HSFO crack: the monthly average barely moved from September (-$29.59/bbl to -$28.20/bbl), but the weekly path went from -$39.14/bbl (W1) to -$17.23/bbl (W5).
• VLSFO crack: -$3.78/bbl (Sep -$2.81/bbl, a year ago +$1.10/bbl), ending at -$5.75/bbl.
• Hi-Lo: $62.83/mt, -26.7% from $85.72/mt in September, ranging $38.75/mt (23-Oct) to $78.75/mt (16-Oct) and closing at $78.00/mt.

Market activity

Bid:offer rose to 1.86:1 as two trading houses did 71% of HSFO selling

• 182 trades from 601 bids and 323 offers (1.86:1), against 248 trades at 1.60:1 in September.
• HSFO: 125 trades, bid:offer 1.71:1 (Sep 1.42:1).
  • Sellers: trading houses Vitol (45) and Aramco Trading (44). TotalEnergies fell to 8 from 22.
  • Buyers: bp Netherlands (36), BP Oil International (28), Mercuria (19) and bunker supplier United Bunkers (14), covering bunker demand.
• VLSFO: 57 trades, 2.10:1 (Sep 1.84:1). Glencore stayed the main seller (34, from 74); TotalEnergies led buying (19); Shell fell to 9 from 38.
• Fewer offers against steady bids fits the backwardation: with prompt barrels gaining value, sellers had less reason to offer.

Cross-regional dynamics

Asia's squeeze widened ARA's HSFO discount to Singapore by $64.35/mt, but freight kept the arb shut

• Singapore 380 rose 19.2% MoM to $776.65/mt. Middle East fuel oil flows to Singapore are 40-50 kb/d against 100 kb/d in 2025, and Russian HSFO to Singapore fell from 180 kb/d (April) to 25 kb/d (September) after drone strikes on Russian refineries. Singapore residual stocks fell to 18.36 mb, 7% below September (Enterprise Singapore).
• ARA-Singapore HSFO averaged -$161.95/mt (Sep -$97.60/mt), widest -$194.43/mt (16-Oct).
• Med-East Asia freight of $230/t ($36/bbl, against $6.5/bbl a year ago) exceeds ARA's -$190.08/mt discount (30-Oct), so European HSFO cannot move east.
• ARA-Singapore VLSFO averaged -$179.50/mt, wider than -$162.91/mt in September. Singapore's Hi-Lo averaged $80.38/mt, almost half September's $151.03/mt.
• ARA HSFO's premium to US Gulf Coast averaged +$77.07/mt, wider than +$64.89/mt in September.

Curve structure

Bull steepening on all three grades; HSFO M1-M12 widened $50.00/mt as the front led

• HSFO M1 rose $96.75 while M12 rose $46.75: bull steepening, against this market's usual mild contango.
• VLSFO's tightness sits in the first six months, not the prompt: M1-M2 widened only $4.50.
• 1% FO followed HSFO: M1-M12 widened from $83.50/mt on 1-Oct to $140.00/mt on 30-Oct. At these spreads storage loses money, pushing barrels to the prompt.

Price volatility

Volatility moved from crude to fuel oil; HSFO CV rose to 5.85% while Dated Brent's fell to 4.68%

• September's pattern reversed: Dated Brent CV fell from 9.14% to 4.68% while all three fuel oil grades rose.
• HSFO's $119.25/mt range came from fuel oil's own tightness, so crude-only hedges covered less of the risk than in September.

Something to watch

• Russian fuel oil exports: Russian HSFO to Singapore was down to 25 kb/d by September, and the US waived sanctions on Russia on 16-Oct. More Russian residue would ease the Asian shortage that lifted the HSFO crack $23.16/bbl. Monitor: Russian fuel oil exports (Kpler) and the HSFO crack (-$15.54/bbl on 30-Oct).
• Hi-Lo near $80/mt: it never reached $80/mt in October but closed at $78.00/mt on 30-Oct, up from $38.75/mt on 23-Oct. A break above $80/mt would restore scrubber payback and favour HSFO buyers. Monitor: the weekly Hi-Lo close against $80/mt and the Singapore Hi-Lo ($89.10/mt on 30-Oct).
• Freight and the arb: ARA HSFO closed $190.08/mt under Singapore against $230/t freight. If freight drops below the spread, European HSFO moves east, tightening ARA further. Monitor: Med-East Asia freight against the ARA-Singapore HSFO spread, and HSFO M1-M2 ($22.25/mt) through the November roll.

Note: All figures, prices and market activity referenced in this report are based on the period 1 to 30 October 2026.