HSFO cracks have collapsed ahead of IMO 2020 implementation Refinery margins for facilities making HSFO have suffered Sweet-sour differentials set to widen further IMO 2020 is really happening. As expected, high sulfur fuel oil (HSFO) cracks have collapsed in all regions ahead of the implementation of the marine fuel specification change. As a result, refinery margins in facilities making HSFO have suffered, particularly in Asia, with Singapore medium conversion margins dropping to about negative $3/b recently, their lowest level in many years. As HSFO cracks have weakened, sweet-sour crude differentials have started to widen, but with various lags. For instance, in the US, the LLS-Mars spread widened fairly continuously from near zero over the summer to $2/b at the end of October to around $4.25/b currently. This spread will widen further into next year as distillate cracks strengthen (LLS has a high distillate yield) and sour crudes in […]