Bunker prices have mixed direction across ports in the Americas, and as New Orleans and other Lower Mississippi River ports recover from Hurricane Ida several vessels may be diverted to bunker in US Gulf Coast ports unaffected by the damage.
Changes on the day to 09.30 CST (14.30 GMT) today:
- VLSFO prices up in New York ($15/mt), Zona Comun ($4/mt) and Los Angeles ($3/mt), steady in Houston, and down in Balboa ($5/mt)
- LSMGO prices up in Balboa ($29/mt) and Los Angeles ($6/mt), and down in Houston ($9/mt), Zona Comun ($7/mt) and New York ($3/mt)
- HSFO380 prices up in Houston ($2/mt) and New York ($1/mt), steady in Los Angeles, and down in Balboa ($7/mt)
New Orleans and other ports along the Lower Mississippi River remain closed after Hurricane Ida made landfall in Louisiana and moved inland on Sunday. Container and breakbulk terminals are shut in New Orleans as the port assesses the damage done by Ida. An initial assessment found “no major damage” to port facilities, the port said.
Lower Mississippi River is closed to all vessel traffic amid heavy floods and widespread blackouts. Nine refineries, including Baton Rouge and Belle Chase, were taken offline or curbed production in preparation of the hurricane, the US Department of Energy said. Imports are not expected in days, oil analyst firm ClipperData said in a note.
Some vessels scheduled to bunker in New Orleans and other shut ports are being diverted to ports unaffected by Ida such as Houston and Corpus Christi in Texas. These ports could see higher bunker demand until the Louisiana ports reopen. A supplier in New Orleans said it is ready to supply once the port becomes operational.
The US Gulf Coast region’s bunker fuel availability could be impacted in due course as around 95% of the Gulf’s offshore oil production capacity has been shut in, as over 2 million b/d of refinery capacity has been taken offline, and as several oil pipelines and ports remain shut.
A higher-priced VLSFO stem has lifted New York’s benchmark price up above that in Houston, where the price has held steady since Friday.
Balboa’s VLSFO price has dropped by $5/mt relative to Houston, to narrow its premium to $7/mt.
Brent
Front-month ICE Brent crude risen by $0.65/bbl on the day since Friday, to $73/bbl at 09.30 CST (14.30 GMT) today.
Shut in oil production in the US Gulf pushed the futures contract to four-week intraday highs of more than $73/bbl yesterday. Hurricane Ida has shut in around 95% of capacity in the Gulf of Mexico, according to the Bureau of Safety and Environmental Enforcement. All 11 US oil rigs were evacuated and 288, or about half of the platforms, were evacuated as producers braced for the impact of the hurricane. This makes up around 12% of total US capacity, the US government agency said.
Refineries, utilities and ports in Louisiana are struggling with blackouts and flooding after Ida made landfall. The region’s oil output is not expected to recover for several days, ING strategist Warren Patterson said today.
“Infrastructure needs to be assessed for damage, while those refiners who lost power will need to wait for it to be restored. If this is the case, it suggests that we could see further upside in refined product cracks,” Patterson said.
Traders will look for more price direction from the monthly OPEC+ meeting scheduled for tomorrow. The group is expected to stick to its plan to bring back 400,000 b/d of oil per month, according to a Reuters report citing three sources.
While the global supply-demand balance remains in a deficit, “OPEC+ has built in enough of a cushion that this market is still nowhere near having supply concerns,” OANDA analyst according to Ed Moya.