Recent bearish sentiment in the Northwest European high sulfur fuel oil market has eased somewhat after several VLCC cargoes were heard to be loading in December, helping to reduce the oversupply in the region, sources said.
Lower freight rates have helped the export of arbitrage volumes to the East, they said.
High sulfur fuel oil Rotterdam barges, which closed at $188.50/mt Thursday, were assessed at at a discount of around $5-$5.50/mt to front-month swaps Wednesday and Thursday -- levels last seen at the end of October, with the discount having risen as high as $12.50/mt mid-November.
Market sources had said the market was being weighed on by high stocks and a lack of arbitrage opportunities towards Singapore with freight rates at a lump sum of $5.70-$6.30 million in the second half of the month.
However, rates fell back, with VLCC cargoes heard to have been fixed at around $5.50 million. The material being exported to Singapore was mostly going to be RMK and M-100, for blending purposes, sources said.
"Oversupply should ease a bit with vessels moving," a trader in Northwest Europe said.
Other sources said the fuel oil market had remained weak in recent months because refinery margins were favorable, and regardless of whether vessels were being fixed on the arbitrage east.
