General Characteristics

• Heavy ends of crude distillation includes Furnace oil, Low sulphur Heavy Stock (LSHS), Residual Fuel Oil (RFO), Lube oils, Bitumen, Petroleum coke, Paraffin wax, other waxes etc.
• Used as an industrial fuel, Furnace Oil (FO) is a dark viscous residual fuel obtained by blending mainly heavier components from crude distillation unit, short residue and clarified oil from fluidized catalytic cracker unit. 
• Internationally Furnace Oil is known as Fuel Oil and is traded in many varieties based on its specifications of viscosity and sulphur percentage. The most common varieties are 180 cst & 380 cst with 2.0% and 3.5% sulphur.
• The latest estimation of world’s furnace oil production (residue/distillate) in 2004/05 is about 2500 million Metric Tons

Factors Influencing Demand & Supply of Fuel Oil Prices

• Crude oil demand supply scenario
• Weather conditions
• Seasons
• Business cycles determining manufacturing centre
• Global demand particularly from emerging nations
• Dollar fluctuations
• Stocks
• Oil marketing companies’ fortnightly price announcements

Indian Scenario

• India’s Furnace Oil production in 2003-04 is estimated at around 8.74 million metric tons
• Consumption during the period 2002-03 is 8.03 million tons while imports were about 1.26 million tons valuing Rs. 1084 crores during same period
• The Public sector refiners produce major share of furnace oil consumption requirements in India. The imports of furnace oil accounts for about 5-10% of total consumption.  

Consumer-wise Indian Consumption of Furnace Oil (2002-03)
Having being used across a plethora of industries, it is a very important commodity and the pricing, unlike some other petroleum products, is not administered by the government and is a freely priced commodity. Some indicative consumption pattern follows:

Exchanges dealing in Furnace Oil (Fuel Oil)

• Shanghai Futures Exchange (SHFE)
• Multi Commodity Exchange of India Ltd.

Oil units

• 1 Tonne          = 7.33 Barrel = 1.165 Cubic Metres (kilolitres)
• 1 Barrel          = 0.136 Tonnes = 0.159 Cubic Metres (Kilolitres)
• 1 Cubic Metre  = 0.858 Tonnes = 6.289 Barrels
• 1 Million Tonne = 1.111 Billion Cubic Metres Natural Gas
                        = 39.2 Billion Cubic Feet Natural Gas
                        = 0.805 Million Tonnes LNG
                        = 40.4 Trillion British Thermal Units