The front-month visco spread, the differential between the price of 180-cst and 380-cst fuel oil, rose towards a two-year high on Thursday as bidding interest for the low-viscosity fuel soared amid concerns over a tightening of cutter stocks, which are used to blend high-viscosity material into bunker fuels.

Industry sources said that availability of the blend-stock had started to show signs of tightness in the past couple of weeks.

SWAPS MARKET

Reuters data showed the June visco spread jump $2.25 a tonne from the previous session to $9.50 a tonne on Thursday, its highest since July 2015.

On the Intercontinental Exchange (ICE), time spreads of 380-cst fuel oil, from May/June to Sept/Oct, all posted gains over the previous session in trading volumes in excess of a million tonnes by 5:30 p.m. Singapore time (0930 GMT).

The ICE 380-cst July/Aug contract, pegged at a 65 cent premium, posted the largest gains on Thursday over the previous session of 40 cents a tonne.

Meanwhile, the ICE 380-cst June/July contract, also pegged at a 65 cents per tonne premium, was the most actively traded time spread with about 640,000 tonnes in contracts changing hands.

WINDOW TRADES

Four cargo trades were reported in the Platts window on Thursday. These were one 20,000 tonne cargo of 380-cst fuel oil and three cargoes of 180-cst fuel oil totalling 60,000 tonnes.

Thursday’s traded volumes of 380-cst fuel oil were at their lowest since March 2, while traded volumes of 180-cst were at their highest since March 9.

A total of 140,000 tonnes of 380-cst fuel oil and 80,000 tonnes of 180-cst fuel have traded in the window since the start of May.

SINGAPORE INVENTORIES

Singapore onshore fuel oil inventories rose by 1 percent, or 31,000 tonnes, to a two-week high of 3.514 million tonnes in the week to May 3, official data showed.

The small inventory build over the past week was despite a 530,000 tonnes, or 37 percent, increase in net imports.

Traders said demand for bunker fuels helped to absorb the difference in volumes between net imports and onshore inventory builds.

TENDERS

UAE’s Adnoc sold all four June cargoes of medium-sulphur fuel oil to Saudi’s ATC at a premium of around $3-$7 a tonne to MOPAG 180-cst quotes.

Vitol and Mercuria each bought two straight-run fuel oil cargoes from UAE’s Adnoc for delivery in June at a premium of around $27-$28 a tonne to MOPAG 180-cst quotes.