East of Suez bunker prices have shot up with Brent, and deliveries have resumed in Hong Kong after muted activity during the Chinese Lunar New Year holiday.
Changes on the day to 17.00 SGT (09.00 GMT):
· VLSFO prices up in Singapore ($56/mt), Fujairah ($38/mt) and Zhoushan ($30/mt)
· LSMGO prices up in Fujairah ($70/mt), Singapore ($41/mt) and Zhoushan ($27/mt)
· HSFO380 prices up Singapore ($29/mt) and Fujairah ($25/mt)
In Hong Kong, bunker fuel supplies have resumed in full force after the Chinese New Year holiday, says a source. The port experienced tighter supplies in the run up to the holiday owing to high fuel demand. Hong Kong’s VLSFO supplies are expected to remain tight until next week.
Singapore’s Hi5 spread, charting the difference between VLSFO and HSFO380 prices, has surged above $200/mt.
Singapore’s VLSFO price rose on the day to flip to a premium over Fujairah ($3/mt) and Zhoushan ($7/mt). VLSFO lead times in Singapore remain 10-11 days out, while lead times in Fujairah have risen to up to 10 days. Suggested VLSFO380 lead times in Zhoushan are up to eight days out.
Singapore’s HSFO380 price rose on the day to narrow its discount to Fujairah to $25/mt. HSFO380 lead times in Fujairah have climbed up to 12 days, while lead times in Singapore are up to 10 days out.
In South Korea, VLSFO lead times in the southern ports of Busan, Ulsan and Yeosu are slightly down to 8-11 days.
Brent
Front-month ICE Brent has surged $3.28/bbl higher on the day, to $92.36/bbl at 17.00 SGT (09.00 GMT) today.
The benchmark oil price has rallied in response to global supply constraints and by the geopolitical tensions in Ukraine and the UAE.
The US warned yesterday of potential use of a propaganda video showing a staged attack by Russia as a pretext to invade Ukraine, Reuters reports.
Earlier, the UAE intercepted three drones in its airspace. This is the fourth attack on the UAE in recent weeks, and the second invasion of its air space within this week.
A massive winter storm has swept through parts of the US, bringing heavy ice and snow and posing a challenge to mobility, according to Reuters.
“The oil market is too tight and vulnerable to any shock. Even as thousands of flights are cancelled, the energy market is fixated over production and not so much short-term demand shocks,” says OANDA analyst Ed Moya.
However, Citi Research analysts predict an oil surplus in the second quarter of this year, which may sustain for 15-18 months and lead to a 20% fall in the December Brent futures contract, Reuters reports.
Next week, attention will be on the US Energy Information Administration’s short term energy outlook due on 8 February, and the monthly oil market reports to be released by the International Energy Agency (11 February) and OPEC (10 February).