HSFO FOB RotterdamThe high-sulfur FOB fuel oil Rotterdam barge crack spread against Dated Brent has reached its widest discount since the beginning of January, standing at $14.24/barrel, Platts data shows.

HSFO Rotterdam barges rallied Thursday, rising to $332.75/mt ($52.48/b) having been below $330/mt in the previous three days, but were lagging compared to increases seen in Brent Dated prices, which were up $2/b on the day at $66.69/b.

The high-sulfur Rotterdam barge market had been weakening over the week, with market sources pointing at healthy supplies of M-100 materials and the arbitrage with Singapore being closed.

“The arb is closed,” one trader said Wednesday, adding that there was “plenty of m-100 coming in — that’s putting some pressure on the prompt.”

Prices for the beginning of June, on the other hand, were looking stronger.

A trader said Friday that the rising backwardation in Singapore had provided some support to the 3.5% Rotterdam barge market, though some sources saw little justification for the strengthening June/July backwardation given the physical cargo market remained fundamentally oversupplied.

“The market is long fuel oil, tanks are full and refining margins are still good, which leads to higher fuel oil output and there is no really buying appetite in Northwest Europe,” a trader said.

Another source said Thursday that there was “a lot of fuel oil [in the Rotterdam market] but not much [RMG grade] finished material,” which may be one further element supporting the market.

Other sources said weakening cracks were reflecting the strength of prompt Dated Brent crude, which was putting additional pressure on fuel oil cracks.

Expensive freight was also hampering healthy movements of fuel oil into arbitrage, with sources saying there are barely any VLCC and Suezmaxes available on spot.

Source: Platts