The fuel oil hi-lo spread -- the premium of 1% FOB NWE cargo swaps over 3.5% FOB Rotterdam barges -- has moved above $60/mt for the first time since April 1 on supply worries, sources said Thursday.
The physical hi-lo was assessed at $60.25/mt Wednesday, while the corresponding June swap was at $56/mt, Platts data showed.
"There is a fear of gas supply disruptions and better demand ahead of the World Cup," a trader said, adding that utilities had also been quite active in the market.
Traders have said that the start of the winter season in Argentina could also drive Brazilian barrels away from the European market.
Market players were also watching for developments from the talks between Ukraine and Russia, after Gazprom said it would cut gas supplies to Ukraine if the country did not start paying in advance.
So far, Ukraine has rejected a Russian request to pre-pay for its gas beginning in June. In the past, supply disruptions to Ukraine have resulted in lower deliveries to other European countries.
