Bunker prices have extended yesterday’s losses with steep drops as Brent trades close to two-month lows.
Changes on the day to 16.00 SGT (08.00 GMT) today:
- VLSFO prices down in Zhoushan ($22/mt), Singapore ($17/mt) and Fujairah ($15/mt)
- LSMGO prices down in Zhoushan ($22/mt), Fujairah and Singapore ($15/mt)
- HSFO380 prices down in Zhoushan ($16/mt) and Singapore ($10/mt)
Singapore’s Hi5 spread has narrowed by $7/mt today to $121/mt, as its VLSFO price drops has outpaced that of HSFO380.
HSFO380 stems continue to require 10 days ahead in Singapore, which is just one day longer than VLSFO. LSMGO is more readily available in the bunkering hub, at 5-6 days ahead.
Both Zhoushan and Fujairah have shorter lead times for all three grades. Suppliers in Zhoushan can supply promptly with up to three days of lead time. Fujairah’s bunker market is tighter, with up to six days in advance recommended for fuels.
Brent
Front-month ICE Brent crude has shed $3.28/bbl on the day to 16.00 SGT (08.00 GMT), when it stood at $69.35/bbl.
Brent has edged up today following a steep drop yesterday. The combination of an OPEC+ deal that will mean more crude output, and renewed concerns about rising Covid-19 cases from the more infectious Delta variant in parts of Europe and Asia, sent Brent tumbling to two-month lows yesterday.
OPEC+ negotiations ended with a compromise that will see output rise by 2 million b/d from August to December this year, and update the baseline production quotas of five OPEC+ members from May next year.
Some analysts believe the recent price drop for Brent to be short-lived and that the OPEC+ deal has staved off further disunity in the group, which could otherwise have resulted in the supply management pact dissolving into a battle for market share.
“Although the intention to increase production is a short-term negative for oil prices, particularly as it coincides with growth fears sweeping markets this week, in the longer run, the ability of OPEC+ once again to overcome their difference is a positive for prices,” OANDA analyst Jeffrey Halley said.
Pessimism over the rapid spread of the Delta variant, especially in populous countries with low vaccination rates such as Bangladesh, Indonesia, Pakistan and Thailand, has clouded the economic outlook and driven down oil prices in the past day. Spiking cases in Europe prompted some restrictions on movement to be reimposed in Portugal, Netherlands and parts of Spain earlier this month.
“Rising cases of the delta variant of the coronavirus in some Asian and European countries and possibilities of travel restrictions have increased crude oil demand uncertainty to some extent,” ING analysts Warren Patterson and Wenyu Yao said in a note.