European and African bunker prices have surged higher on the back of Brent, after OPEC+ defied calls to mitigate the global oil supply deficit by sticking to its current output plan.
Changes on the day to 08.00 GMT today:
- VLSFO prices up in Rotterdam ($23/mt) and Gibraltar ($10/mt), and steady in Durban
- LSMGO prices up in Rotterdam ($12/mt), Gibraltar ($10/mt) and Durban ($8/mt)
- HSFO prices up in Gibraltar ($10/mt) and Rotterdam ($4/mt)
Rotterdam’s VLSFO price has shot up to close the gap to Gibraltar over the past day. Gibraltar also priced the grade at competitive levels to Rotterdam on several occasions back in August.
VLSFO prices in Rotterdam and Gibraltar since 1 August
VLSFO price gains have also been steeper in Malta and Las Palmas than in Gibraltar in the past day, widening their premiums over Gibraltar to $14/mt and $11/mt, respectively.
A supplier is still delayed by about half a day in Gibraltar, port agent MH Bland says. The port is slightly less congested than yesterday, with four vessels waiting to bunker today.
High swells from the northeast continue to threaten disruptions to bunker deliveries at Las Palmas’ outer anchorage, adding pressure on the port’s inner anchorage and ex-pipe supply capacity. Calmer seas are forecast from tomorrow afternoon, and to last until Sunday.
Stormy weather has limited cargo handling operations and anchorage bunkering in Novorossiysk since the middle of last week. Winds bordering on gale-strength is forecast in the Black Sea port until Thursday morning, and again on Saturday. Ex-pipe supply remains possible, sources say.
Algoa Bay has had calmer weather conditions this week, allowing bunker suppliers to catch up with backlogged deliveries following waves of up to 5 metres and disrupted bunkering last week.
18 vessels were scheduled to arrive in Algoa Bay between Friday and Sunday, and another seven vessels are due to arrive over the next three days, shipping agent Sturrock Grindrod says. Suppliers will look to clear backlogged and new stems before the weather is forecast to worsen on Thursday afternoon.
VLSFO prices in Algoa Bay and adjacent Port Elizabeth surged to bigger premiums over other South African ports last week. They remain $35-40/mt above prices in Cape Town and Richards Bay, and over $50/mt above Durban’s price.
Brent
Front-month ICE Brent has extended its rise by adding $2.38/bbl on the day to 08.00 GMT today, when it traded at $81.72/bbl.
The futures contract is trading close to the three-year highs reached yesterday, when OPEC+ decided to stick to its current output plan for November.
India and the US have been increasingly vocal about what they perceive as a deepening global oil supply deficit. High oil prices hold back consumer demand and could prolong economic recoveries from the pandemic, they have argued. They have called for OPEC+ to bring back more of the historic 10 million b/d production cut it committed to last year at a faster pace than the group’s current phase-back of 400,000 b/d per month.
Soaring natural gas prices could prompt more power plants to use oil instead, especially in the event of a cold winter in the northern hemisphere.
“OPEC+ is not concerned they will lose the battle of market share to US shale and will fully take advantage of roaring demand and elevated prices this winter,” OANDA analyst Ed Moya commented.
Aramco’s chief executive Amin Nasser told the Energy Intelligence Forum that he expects natural gas shortages and high prices in Europe to support oil demand, according to S&P Global Platts. He estimates power plants will switch 500,000 b/d more of their gas consumption to oil.