Physical high sulfur fuel oil cargoes in the Mediterranean have hit a 10-month high to Rotterdam barges amid improved fuel availability in Northwest Europe, sources said Monday.
The HSFO Med/North spread -- the difference between 3.5% FOB Mediterranean fuel oil cargoes and 3.5% FOB Rotterdam barges -- rose $1.75/mt Friday to be assessed by Platts at $7/mt, the highest since January 23 when it was $8.75/mt.
The FOB Rotterdam 3.5% HSFO barge market has seen large flows of HSFO coming out of the Baltic in line with elevated local output with the refinery turnaround season ending, trader said.
The improved supply picture in Northwest Europe has pressured the physical 3.5% FOB Rotterdam barge premium to the front-month swap, with a $2.25/mt drop to $1.25/mt Friday, Platts data show.
"We definitely have been shown a lot of barrels on both straight run and cracked RMG last week," one NWE trader said Monday.
"Producers were focusing on the production of RMG 380 instead of RMK 500," another source said.
"Tanks are getting filled and people are more interested in blending RMG now," the first source said.
Traders said that a closed East-West arbitrage window in the first half of October also contributed to the weakening premiums for the 3.5% FOB Rotterdam barge market.
Meanwhile, tight availability in the Mediterranean until the second half of November -- particularly in the west Mediterranean bunker hubs -- has seen traders struggle to find barrels to cover term and spot bunker demand, sources said Monday.
"There's tightness in the Mediterranean, particularly for low density product. Most material is being sourced from the North currently," a trader said.
