London (Platts)--22Feb2013/721 am EST/1221 GMT
The Mediterranean high sulfur fuel oil market's discount to its Northwest European counterpart has narrowed to a one-month low on greater buying interest, tighter supply and a fall in 3.5% sulfur Rotterdam barges, sources said Friday. The physical Med/north -- the difference between FOB Rotterdam 3.5% sulfur fuel oil barges and FOB Med 3.5% sulfur fuel oil cargoes -- moved to a $2.75/mt discount for the Mediterranean Thursday, the narrowest discount since January 11, Platts data shows. The front-month March Med/north swap also has narrowed over the past three weeks. On Thursday the front-month swap was assessed at a $5.25/mt discount, compared with an $8/mt discount for the front-month swap on January 31. "The Med is looking tighter across the board compared to January's weak levels," a trader said. Article continues below...Sign up to European Marketscan today. European Marketscan delivers everything you need to gain a full and clear 360 degree view of the European oil products market each business day. European Marketscan is the tool used by all the major players in the oil market. It provides trusted, reliable and comprehensive coverage of European refined oil product markets and ensures you are kept up to date with the driving forces behind the latest changes in key product prices.
The Mediterranean high sulfur fuel oil market's discount to its Northwest European counterpart has narrowed to a one-month low on greater buying interest, tighter supply and a fall in 3.5% sulfur Rotterdam barges, sources said Friday. The physical Med/north -- the difference between FOB Rotterdam 3.5% sulfur fuel oil barges and FOB Med 3.5% sulfur fuel oil cargoes -- moved to a $2.75/mt discount for the Mediterranean Thursday, the narrowest discount since January 11, Platts data shows. The front-month March Med/north swap also has narrowed over the past three weeks. On Thursday the front-month swap was assessed at a $5.25/mt discount, compared with an $8/mt discount for the front-month swap on January 31. "The Med is looking tighter across the board compared to January's weak levels," a trader said.
Article continues below...
European Marketscan delivers everything you need to gain a full and clear 360 degree view of the European oil products market each business day. European Marketscan is the tool used by all the major players in the oil market. It provides trusted, reliable and comprehensive coverage of European refined oil product markets and ensures you are kept up to date with the driving forces behind the latest changes in key product prices.
"There's been a bit more demand recently," said a second trader earlier in the week. There were reports last week that two Suezmax vessels were fixed to carry high sulfur material from the region to Asia, one booked by Holt and the other by Shell. Neither company was available for comment. "The question is whether these Suezmaxes will actually leave the region with HSFO on board. The arb doesn't look that open," a trader said. At the same time, Rotterdam HSFO barges have been relatively bearish amid a lack of arbitrage fixtures to Asia and on healthy Russian inflows despite colder Baltic weather. On Thursday, FOB Rotterdam 3.5% sulfur fuel oil barges were assessed flat to the March swap, down from a $2.25/mt premium Wednesday. The Mediterranean high sulfur fuel oil market usually trades at a discount to NWE material. But during times of reduced supply or increased demand Mediterranean HSFO cargoes can trade at a premium to Rotterdam barges. This can open up arbitrage opportunities to bring cargoes to the Mediterranean from NWE.--Marko Trtica, marko_trtica@platts.com--Paulina Lichwa-Garcia, paulina_lichwa@platts.com--Edited by Jonathan Dart, jonathan_dart@platts.com
Tweet
@PlattsOil on Twitter