Bunker prices are down across East of Suez ports, as Brent has dropped below $85/bbl and is on track for its first weekly drop since early September.
Changes on the day to 16.00 SGT (08.00 GMT) today:
- VLSFO prices down in Zhoushan ($6/mt), Fujairah ($3/mt) and Singapore ($2/mt)
- LSMGO prices down in Singapore ($16/mt), Zhoushan ($7/mt) and Fujairah ($4/mt)
- HSFO380 prices down in Singapore ($11/mt) and Fujairah ($4/mt)
Zhoushan’s VLSFO price has recorded a sharper fall than in Singapore and Fujairah in the past day, bringing it down to parity with Singapore, and to a discount to Fujairah.
Bunker operations have been suspended in Zhoushan since yesterday as rough weather hit the port. Operations are expected to resume with improved weather on Sunday. Bunkering continues as normal in Shanghai, where HSFO380 has been tight recently, and VLSFO and LSMGO more readily available.
Singapore’s fuel oil stocks have added another 1% in the week to 20 October, to stand at 21.69 million bbls, data from Enterprise Singapore showed yesterday. The bunkering hub’s middle distillate stocks fell by 5% to 9.81 million bbls – their lowest levels since early January 2020.
Brent
Front-front-month ICE Brent has declined by $0.53/bbl on the day, to $84.57/bbl at 16.00 SGT (08.00 GMT).
After rising to intraday highs of around $86/bbl yesterday, Brent is heading for its first weekly drop since early September. A market correction was expected based on indices pointing to overbought futures.
The yesterday’s sell-off, and “A few more days of range-trading will bring the overbought relative strength (RSIs) technical indicators firmly back in neutral territory,” OANDA analyst Jeffrey Halley says.
Some decline in coal and natural gas prices have also added downward pressure on Brent. Widespread shortages of natural gas across Europe and Asia, and a critical coal shortage in China, have spiked prices in recent weeks, and triggered power plants to source more fuel oil and diesel as feedstock. Power supply concerns linger as winter approaches in the northern hemisphere.
More attractive coal and gas prices could alleviate some of the built-up added pressure on oil stocks. Oil stocks were already under pressure from recovering global demand and unwillingness from OPEC+ to increase output above its current monthly phase-back schedule.
US shale oil production is forecast to increase by 77,000 b/d from October, to 8.22 million b/d in November, according to the Energy Information Administration (EIA). But this is unlikely to plug the global supply gap, which has been widening with recovering economic activity as Covid-19 lockdown restrictions have eased.