Northwest European HSFO barge cracks sank to their lowest levels in over 11 weeks Thursday on improved supply in Rotterdam and a rally in dated Brent, sources said.
The 3.5% FOB Rotterdam barge crack slumped to minus $14.69/b Thursday.
They were last lower on August 6 when they were minus $14.70/b, Platts data shows.
Fuel oil cracks had reached an 18 month high at the beginning of October on a tight VLCC loading schedule in Rotterdam on a workable arbitrage to Singapore.
But with arbitrage economics since then less favourable, a supply glut has built in Rotterdam as increased Baltic flows landed in October as Russian refinery maintenance ended, while weak feedstock differentials to crude pulled high sulfur straight run into the HSFO blending pool, sources said.
A lack of VLCCs available to carry the material east has added to the build-up in supplies.
"Less VLCCs are leaving ARA now, Singapore premia are not fabulous," one trader said. "Refiners are also coming out of maintenance, Rotterdam is starting to spout fuel."
Combined with a recent rally in dated Brent -- rising $2.54/b in the week to Thursday -- the softer fundamentals have seen HSFO cracks retreat $5.97/b since their near year and a half peak on October 2.
