Dear Readers,
With refinery runs ramping up and inventories shifting like spring weather, May has brought a swirl of signals for anyone tracking the energy space. From bunker market pivots to fuel oil trade shifts and a global crude scene still trying to find its balance, we’ve got the latest you need—wrapped in our signature style: clear, current, and just a little more fun than your typical energy brief.
Crude Oil Market Overview
May brought signs of imbalance in all the wrong places. U.S. refinery utilization climbed steadily past 90%, yet inventories barely moved. Crude oil stocks rose slightly, but they remain well below historical norms—about 6–7% under the five-year average. Imports nudged higher, but at 13–15% below last year’s levels, foreign barrels aren’t bailing out the system either.
The real story lies in demand—or lack thereof. Gasoline and distillate demand both dipped year-over-year, with diesel dragging down the distillate complex despite agriculture and freight still moving. Only jet fuel kept momentum, flying 4% above last year’s volumes.
Altogether, the U.S. finds itself in a curious middle ground: refinery activity is robust, but product demand is soft, and supply feels long in the system. It’s a reminder that just because we’re making fuel doesn’t mean it’s moving as fast as we’d like.
Bunker Fuel Insights
The global bunker market is tiptoeing its way through a mix of regulations and fuel shifts. The new Mediterranean SECA zone kicked in this month, forcing all ships in the region to burn 0.10% sulfur max fuels—a move that sent suppliers scrambling to scale up compliant LSMGO capacity.
Meanwhile, VLSFO availability remains balanced across most key ports, but regional pockets like Zhoushan and parts of Japan reported tighter conditions. Singapore continues to show stable lead times, though biofuel blends and LNG options are seeing more demand from forward-looking operators.
On the innovation front, the bunker world is evolving fast:
- Galveston’s LNG port is moving forward, marking a Gulf Coast milestone.
- Microsoft’s trial with bio bunker fuels signals big tech’s push into lower-carbon shipping.
- TFG Marine’s U.S. Gulf expansion suggests confidence in regional demand, despite softening trade volumes.
All told, the bunker sector is navigating toward a future that’s cleaner and more dynamic—even if traditional volumes aren’t surging just yet.
Fuel Oil Sector Highlights
This month’s fuel oil landscape can be summed up in one word: long. Despite rising refinery runs, demand is underwhelming—especially for diesel. While agricultural and industrial use has held up in some areas, distillate inventories are now 16% below the five-year average, and the drawdown isn’t translating into price support or movement.
Even high-sulfur fuel oils are under pressure. With Europe importing fewer barrels and Asia staying relatively quiet, traditional outlets for residual and heavier fuels are showing signs of saturation.
One sleeper to watch: slurry oil continues to gain traction as a cost-effective marine blendstock and industrial fuel extender. As emission regulations tighten, its future may depend on whether cleaner-cut variants can be produced at scale.
THE CRUDE SIDE: U.S. AND GLOBAL DYNAMICS
Domestic production remains a pillar of global crude supply. While growth isn’t explosive, U.S. output is still expected to increase by about 600,000 bpd over 2025, keeping terminals busy and tankers full.
Globally, it’s a balancing act. OPEC+ is holding the line on cuts, but the market isn’t reacting with the usual bullishness. The rise of non-OPEC players like Guyana, Brazil, and the U.S. continues to dilute OPEC’s ability to steer sentiment.
Trade routes are adjusting too:
- Europe continues to lean on U.S. light sweet crude to replace Russian barrels.
- India and China are doubling down on long-term contracts with Middle Eastern suppliers, signaling less spot-market flexibility.
In short, the crude chessboard is getting more complex—and the old rules don’t apply like they used to.
INTERESTING FACTS: Oil Tanker Edition
- Biggest Tanker Ever? The Seawise Giant, scrapped in 2010, could carry over 4 million barrels of crude.
- Tankers Are Old School: VLCCs (Very Large Crude Carriers) have been around since the 1960s.
- Suez vs. Panama: VLCCs are too big for the Panama Canal—but they barely squeeze through the Suez.
- Invisible Giants: Fully loaded, a tanker can sit 20+ meters deeper in the water than when empty.
- Burning Their Own Fuel: Tankers use bunker fuel to power their engines—yes, they burn what they carry.
- Tanker Speeds: On average, crude carriers travel around 13–15 knots.
- Ghost Fleet: Hundreds of tankers operate off-grid for sanctioned oil trades—yes, it’s a real thing.
- Ship-to-Ship Transfers: Common in places like the Strait of Malacca to avoid port congestion.
- Double Hulls: Now required globally after the Exxon Valdez disaster.
- Every Drop Counts: A 2% leak in a supertanker could release over 80,000 barrels of oil—staggering.
SUGGESTED READING
“The World For Sale: Money, Power, and the Traders Who Barter the Earth’s Resources” by Javier Blas & Jack Farchy
Ever wonder who really moves the world’s oil? The World for Sale pulls back the curtain on the secretive world of commodity traders who transformed global oil markets. From the rise of supertankers to backchannel deals with dictators, this gripping book reveals how traders rewrote the rules of geopolitics and commerce—making fortunes while fueling the world. A must-read for anyone in the energy space.
FINAL THOUGHTS
May was a month of contradictions: supply kept growing, but demand just didn’t show up. The fuel world is watching, waiting—and adjusting. As always, Signal Fluid Solutions will continue monitoring every turn in the market to help our partners stay informed and ahead.
The Signal Fluid Solutions team would like to take this time to thank you for your business and thank you for allowing us to be an important part of you supply team.
Tyler Jordan – Oil Trading Manager – 909-203-0237
