FOB Rotterdam 0.5% sulfur marine fuel barges were assessed at $791/mt May 13, up $9.25/mt since May 6.

Marine fuel

The premium for delivered 0.5%S marine fuel to barges at Rotterdam has gained $6.75/mt since May 6 to $31/mt.

Supply in the very low sulfur fuel oil and low sulfur markets remained tight, with the Mediterranean relatively shorter than the North, sources said recently. Marine fuel tightness was also heard in Singapore, with market participants quick to point to a wider lack of barrels across Europe and Asia.

Meanwhile, the acute prompt tightness in LSFO that saw balance-month and month one Northwest European 1% fuel oil cargo time spreads trade at record highs of $26.5/mt in early March has abated. Weaker demand softened the prompt part of the paper market, which flipped to a contango structure and was last assessed at minus $7/mt on May 13.

VLSFO bunker prices rose sharply week on week, with delivered 0.5% material in Rotterdam gaining 5.8% in the week to May 13. Sources in the Amsterdam-Rotterdam-Antwerp region said that 90% of bunker demand in the region was focused on VLSFO during the course of the week, partially due to uncertainty over the origin of HSFO available at the hub.

Suppliers in the Mediterranean said VLSFO availability had tightened during the week, triggering shortages in Malta and the Canary Islands. New supply to the ports is not expected until next week, sources said.

High sulfur fuel oil

The Hi-5 prompt-month spread -- the differential between 0.5%S and 3.5%S fuel oil barges at Rotterdam -- started to climb over the past week and was last assessed at $161.25/mt May 13, up $17/mt since May 6.

Availability of non-Russian HSFO in the ARA region is improving amid signs of rising supply, sources said recently.

Alternate sources from as far away as the east coast of South America but also the Mediterranean and local refineries have begun to emerge as buyers continue to pivot away from Russian material.

Rotterdam HSFO bunker prices ended the week at $645/mt, rebounding from a $40/mt fall May 9.

According to Kpler shipping data, a larger non-Russian HSFO market emerged during the week, with imports from Poland and Lithuania totaling 230,000 barrels.

Russian HSFO material continued to flow into the ARA region, however, with Russian-origin imports increasing 146% week on week to 1.13 million barrels.

Supply grew far tighter in Germany, where delivered HSFO fetched all-time high premiums over Rotterdam material in the absence of any new imports in April.

Feedstocks

VGO supplies remain extremely tight, with a lack of supply for both Russian and non-Russian product. Tightness in Russian barrels is starting to be felt as Russian refineries have reduced output as demand has weakened following continued self sanctioning.

CIF NWE LSVGO was last assessed at a premium over July ICE Brent Futures of $4.17/b on May 13, up from $2.85/b on May 6, according to Platts assessments by S&P Global Commodity Insights. Meanwhile, CIF NWE HSVGO was last assessed at a premium over July ICE Brent Futures of $3.62/b on May 13, up from $1/b on May 6.

With the distinct possibility of further sanctions on Russian oil being introduced by the EU, market participants have spoken of potential new trade flows emerging from Russia to Asia where buyers are more willing to accept Russian-origin barrels.