NWE LSFO barge premium at one-month high, barge/cargo spread turns positive

The northwest European low sulfur fuel oil barge premium to the front-month swap rose to an almost one-month high Tuesday, with 1% FOB NWE barges assessed at a $5/mt premium to the August swap.

Some traders said the move was a temporary one on the day, while others pointed to greater volumes being sold on cargoes, leaving the barge market short.

“The firmer barge/cargo is a function of lack of stocks in ARA. I think most people sold cargo lots and barges have been left undersupplied,” a trader said.

The low sulfur fuel oil barge/cargo spread — the differential between 1% FOB Rotterdam barges and 1% FOB NWE cargoes — rose to $1.75/mt Tuesday, having traded in negative territory for all but one day since June 9.

The barge/cargo typically trades at a premium that is reflective of the costs of breaking bulk, selling larger cargo sizes — typically 30,000 mt — into barges, typically traded in 1,000-5,000 mt clips.
Source: Platts