NW Europe fuel oil hi-lo rebounds on firmer LSFO cargo buying interest

The Northwest Europe hi-lo -- the premium of 1% sulfur fuel oil FOB NWE cargoes over 3.5% sulfur FOB Rotterdam barges -- rose to its highest level in about a month, reaching $18.25/mt after 1% FOB NWE cargoes strengthened on firmer buying interest.

The hi-lo was last higher on September 18 at $18.75/mt.

"The hi-lo is about where it should be, it's at more normal levels. Some refineries are in maintenance so it's had an effect," a trader said Monday.

Rotterdam HSFO barges were relatively stable last week as the arbitrage to Asia appeared closed and supplies were ample despite Russian refinery maintenance.

Meanwhile, the 1% fuel oil FOB NWE cargo market found traction to the upside following determined buying interest from BP.

"It's a bit weird that fundamentals haven't changed and that the hi-lo is moving up... there is just no demand," said an LSFO trader.

The Rotterdam delivered bunker hi-lo spread moved to a four-week high after LSFO barges firmed, and as premiums for delivered HSFO bunker barges fell, sources said.

On Friday, the premium of LSFO bunker fuel over HSFO fuel reached $22/mt, rising week-on-week from as low as $11/mt, Platts data shows. The last time the spread between low sulfur and and high sulfur delivered bunker fuel oil was higher was at $25/mt on September 18, Platts data shows.

Bunker traders said that delivered fuel oil hi-lo spread was underpinned by softening HSFO bunker values after loading delays subsided in Rotterdam, while LSFO delivered bunkers found support from a firmer Northwest Europe cargo market.
Source: Platts