Fuel oil storage terminals are feeling the squeeze as the International Maritime Organisation (IMO) sulfur cap deadline looms ever closer.
International Matex Tank Terminals, located near the port of New Orleans, has seen a number of storage leases cancelled for heavy fuel oil according to operator Macquarie Infrastructure Corporation and reported by the Financial Times.
Uncertainty over the value of heavy fuel is reflected in future prices with the future price for US Gulf Coast high-sulphur fuel oil for January 2020 delivery below the level for delivery in April 2018 by double digits.
US shale oil production is also a factor in the fall off in demand for heavy fuel oil storage as it yields a lighter grade of crude that produces less residual heavy oil.
Macquarie Infrastructure is to invest $75 million a year in part to repurpose tanks to handle liquids other than heavy fuel oil, the report said.