The Med/North, the premium of FOB Med 3.5% sulfur fuel oil cargoes over FOB Rotterdam 3.5% barges, rose $1.00/mt Tuesday to reach $1.75/mt, its highest in over a month.
It was last higher on June 20 at $3.25/mt, Platts data shows.
A supported Med market and softening barge market in the North have boosted the current Med premium, said traders.
"There is buying interest from the bunker guys out there, but its mostly 10,000, 15,000, 20,0000 mt parcel sizes," said one Mediterranean cargo trader. "If you can combine two with one handysize cargo it works."
"I don't think the market is that long. I haven't found it difficult to find bids at good premiums," said a second source.
The premium of Med fuel oil over the North has also been helped by a softening Rotterdam barge market; the premium of FOB Rotterdam 3.5% sulfur fuel oil barges over equivalent front-month swaps sank to a three-week low Monday, down $2.00/mt at $1.75/mt.
On June 27, 3.5% sulfur fuel oil barges were at a discount of $0.25 to the equivalent front-month swaps, Platts data shows.
The swap Med/North differential has been meanwhile persistently trading at a discount across the entire forward curve.
But the prompt month's values have strengthen significantly in the past week. The balance-month July Med/North swap spread was assessed $1.50/mt up on day at minus $0.25/mt Monday, the level at which it traded during the Platts Market on Close assessment process.
But the August swap was assessed at minus $6.25/mt, indicating that tightness of the prompt is not expected to persist in the next month.
Source: Platts
