The 3.5% Rotterdam barge crack spread to Brent futures soared to a USD 3.78 a barrel premium this week, data from LSEG showed, their highest since LSEG records begin in 1988.Margins for high sulphur fuel oil (HSFO) rallied at Asia oil hub Singapore to more than two-year highs this week, led by a strong European market, trade sources told Reuters.
The strength implies potentially higher procuring costs for the fuel which typically goes into refineries as feedstock or into refuelling hubs as marine fuel.
Singapore 380-cst HSFO/Dubai crack spread for November hit discounts of USD 2.85 a barrel at the Asia close on Thursday, based on data from financial group LSEG. The spread was last seen higher in May 2022. Meanwhile, the December crack spread closed at discounts of about USD 5 a barrel.
Margins have rallied higher despite an increase in fuel oil supplies to Asia this month, with strength spilling over from markets in the West, trade sources said.
Supplies into Europe's Amsterdam-Rotterdam-Antwerp oil hub have tightened this month and boosted European price benchmarks.
The 3.5% Rotterdam barge crack spread to Brent futures soared to a USD 3.78 a barrel premium this week, data from LSEG showed, their highest since LSEG records begin in 1988.
The European market has tightened amid declining imports from the United States amid an arbitrage window that is shut, according to trade sources.
HSFO inflows from the U.S. to Rotterdam have dropped from over 200,000 metric tons in September to zero in October so far, with just one cargo of about 72,000 tons expected to arrive in end-October, Kpler data showed.
A spike in Egyptian demand for fuel oil coincided with the lower supply in Europe, buoying margins for the fuel.
Tensions in the Middle East, which is a key exporting region of fuel oil, also kept sentiment supported, sources said.
