Americas bunker prices continue to rally on OPEC+ supply restraint, and LSMGO is more expensive compared to VLSFO than it has ever been in several ports.
Changes on the day to 09.30 CST (14.30 GMT) today:
- VLSFO prices up in Los Angeles ($23/mt), Houston ($14/mt), New York ($13/mt) and Balboa ($4/mt), and down in Zona Comun ($1/mt)
- LSMGO prices up in Balboa ($31/mt), New York ($25/mt) and Houston ($21/mt), and down in Los Angeles ($4/mt) and Zona Comun ($2/mt)
- HSFO380 prices up in Los Angeles ($19/mt), New York ($9/mt) and Balboa ($3/mt), and down in Houston ($5/mt)
LSMGO prices have rallied further and outpaced gains for VLSFO in Houston, New York and Balboa. Their LSMGO-VLSFO spreads are now at their widest ever.
- Houston’s LSMGO-VLSFO spread has widened by $30/mt from 5 September, to $143/mt today
- New York’s LSMGO-VLSFO spread has widened by $70/mt from 5 September, to $151/mt today
- Balboa’s LSMGO-VLSFO spread has widened by $20/mt from 5 September, to $164/mt today
In addition to rising alongside Brent crude futures, gasoil prices have been supported by supply disruptions and heating oil demand.
Refinery outages on the US Gulf Coast in the lead-up and aftermath of Hurricane Ida curbed production and weighed on distillate inventory levels, dragging them considerably below their five-year average.
Rising pre-winter demand for heating oil and soaring natural gas prices has contributed to prop up heating oil futures, which have been trading at their highest since 2014.
Bunker delivery schedules are filling up for the coming week at the Zona Comun anchorage. Two suppliers’ earliest delivery dates range between 4-6 days out. Another supplier has no availability for days towards the end of the week, and the earliest date about 10 days out.
VLSFO volumes continue to be limited in nearby Montevideo.
Zona Comun’s VLSFO and LSMGO prices are virtually unchanged on the day, steadying after sharp rises in the previous session.
VLSFO values have also been steady in Brazil’s Rio Grande, Paranagua and Rio de Janeiro, while Santos’ VLSFO price gains have been more pronounced, at $8/mt. That gain has halved Santos’ discount to Zona Comun, to $11/mt now.
Brent
Front-month ICE Brent crude has come up further, adding $1.44/bbl on the day, to $82.93/bbl at 09.30 CST (14.30 GMT) today.
Brent has rallied to another three-year high of just under $83/bbl, drawing further support from yesterday’s OPEC+ decision to stick to its current output plan for November.
OPEC+ members are cautious about opening the taps too quickly in the event that a fourth Covid-19 wave will hold back the global demand recovery.
They defied calls from the US and India – the world’s biggest and third biggest oil consumers – to bring back supply at a faster pace to meet global demand and stave off inflationary price pressure from higher fuel prices. High oil prices hold back consumer demand and could prolong economic recoveries from the pandemic, they have argued.
The OPEC+ Joint Technical Committee (JTC) has estimated the world will be in a 1.1 million b/d oil supply deficit this year, and that the supply-demand balance will flip to a 1.4 million b/d surplus next year.
Spiked natural gas prices could prompt more power plants to use oil instead, especially if the winter gets cold in the northern hemisphere.
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.