East of Suez bunker prices have come off sharply with Brent as the discovery of a new Covid-19 variant has triggered renewed oil demand concerns.
Changes on the day to 16.00 SGT (08.00 GMT)
- VLSFO prices down in Zhoushan ($22/mt), Singapore and Fujairah ($21/mt)
- LSMGO prices down in Zhoushan ($27/mt), Fujairah ($26/mt) and Singapore ($24/mt)
- HSFO380 prices down in Singapore ($17/mt) and Fujairah ($14/mt)
VLSFO availability in Hong Kong is tight owing to increased demand and low supply, a source says. Only two suppliers have product at present. Lead times for LSMGO in Hong Kong are up to four days, and HSFO380 availability remains very tight for prompt dates.
VLSFO lead times in Singapore of 9-10 days are typically required, which is still longer than the 6-7 days for LSMGO. HSFO380 is particularly tight with 10-12 days ahead advised.
VLSFO, HSFO380 and LSMGO grades are all tight for prompt dates in Fujairah, with around 6-7 days of lead time needed.
Singapore and Fujairah’s VLSFO prices have fallen in lockstep in the past day, keeping them at near parity. Zhoushan’s price has shed a similar amount to sustain its $11/mt discount to the two other ports.
Bunkering in Zhoushan may be disrupted by strong winds and heavy swells from Monday to Wednesday next week. VLSFO availability in Zhoushan remains tight with resupply expected on 2 December. LSMGO supply at the port remains tight due to demand from fishing vessels, and replenishment of this grade is also expected on 2 December.
Brent
Front-month ICE Brent has slumped $3.41/bbl lower on the day, to $78.71/bbl at 16.00 SGT (08.00 GMT).
Brent has come off sharply as investors grow vary of the rapid spread of a new, likely more transmissible Covid-19 variant. Vaccines are said to be less effective against this yet unnamed variant that has ripped through South Africa to become the dominant strain. Several countries, including the UK and Singapore, have banned flights from South Africa and its neighbouring countries in an attempt to contain its spread.
Brent is heading for a slight $0.18/bbl drop on the week, weighed down by expectations of a bigger oil surplus building early next year than previously thought. OPEC’s advisory board said the release of 70 million bbls from strategic petroleum reserves announced by the US and other major oil-consuming countries this week could tilt the global supply-demand balance towards a larger surplus in January and February than previously thought.
“We expect the OPEC+ alliance will suspend its scheduled 400kb/d increase for January at its meeting next week. This would buffer the market from headwinds to demand, such as renewed travel restrictions as a new wave of the pandemic hits Europe and the US”, says ANZ commodity strategist Daniel Hynes.
An OPEC+ suspension will bring the market back into a deficit in the first quarter next year, ANZ estimates.