Rotterdam’s VLSFO price has climbed to record highs, and VLSFO prices are at their highest since the IMO 2020 transition in other major European and African ports.
Changes on the day from Friday, to 08.00 GMT today:
- VLSFO prices up in Rotterdam ($20/mt), Durban ($18/mt) and Gibraltar ($14/mt)
- LSMGO prices up in Gibraltar ($12/mt) and Rotterdam ($11/mt)
- HSFO prices up in Gibraltar ($10/mt) and Rotterdam ($2/mt)
Rotterdam’s VLSFO price has climbed to fresh all-time record highs, while Gibraltar and Durban saw higher prices for the grade in December-February 2020, when most of the global shipping fleet switched to low sulphur fuels.
Recent strength in VLSFO prices has pushed Rotterdam’s Hi5 spread to $140/mt – its widest since February 2020. The spread has shot up from $80/mt just three weeks ago.
Some bunker suppliers have tight availability of VLSFO in the ARA hub, which along with robust demand, could have provided some price support.
ARA’s total independent fuel oil stocks – which include all fuel oil grades – fell to their lowest level in three months last week. Supply constraints at the VLSFO-producing Sines refinery in Portugal may also have reduced available volumes in the region.
High swells and winds continue to threaten anchorage deliveries and may cause delays in Las Palmas and Algoa Bay this week. Malta has rough weather forecast from Wednesday.
According to weather forecasts, Gibraltar Strait ports have calm weather in store for the next week.
Brent
Front-month ICE Brent has more than reversed the losses it made at the end of last week by jumping $1.60/bbl higher on the day since Friday, to $86.17/bbl at 08.00 GMT today.
Brent has been trading towards mid-$86/bbl levels today – its highest point since October 2014.
Despite recent calls from the US, India and Japan to increase crude production, Saudi Arabia has doubled down on supply restraint. Saudi energy minister Prince Abdulaziz bin Salman has cautioned against possible future demand setbacks from Covid-19. On Saturday he told Bloomberg Television “We are not yet out of the woods…We need to be careful. The crisis is contained but is not necessarily over.”
“This was interpreted by the market to mean that OPEC+ will stick to cautiously adding supply after drastic cuts were made in 2020,” DailyFX strategist Daniel McCarthy says.
Brent continues to draw seasonal support from increasing heating oil demand as the winter approaches in the northern hemisphere. Demand has been bolstered by Europe and Asia’s energy crunch and more switching to oil-based products than usual.
The number of US oil and gas rigs in operation inched down by 1 to 542 last week, figures from energy services firm Baker Hughes showed on Friday. That was the first weekly drop in seven weeks. The rig count was still nearly twice as high as at the same last time year, however.
Brent values have been rising steadily on the back of recovering global demand and inventory draws since August. Demand has recovered with vaccinations, fewer restrictions on movement and revived economic activity.