Very low sulfur fuel oil cracks hit 10-month highs in Europe Jan. 11, shrugging off weakness seen earlier in the new year, as tight supply offset sluggish demand.

Reduced refinery runs in Europe have continued to limit supply of 0.5%S marine fuel, boosting values.

“Demand is not great...but there is also not much production,” one fuel oil source said.

The 0.5%S FOB Rotterdam barge crack was assessed at $7.28/b after a brief dip at the start of 2021, rallying by $1/b in the space of a week driven by strength in Brent. It remains, however, the most profitable transport crack spread, with those for gasoline and jet fuel hit by sharply reduced demand due to renewed lockdowns and travel restrictions to combat the coronavirus.

The crack was last seen higher on March 12, when it was assessed at $9.77/b before plummeting more than $4/b in a day.

The new pandemic measures have cast doubt over hopes of a spring demand recovery for transport fuels.

The spread between VLSFO and low sulfur gasoil – the next most profitable transportation product, which was assessed at $5.02/b – has continued to widen and is currently at $2.26/b. The average December spread was 67 cents/b.