ENGINE: Americas Market Update
Bunker prices have mixed directions in the Americas amid a day of volatile Brent futures.
Changes on the day to 09.30 CST (14.30 GMT) today:
- VLSFO prices up in Balboa ($5/mt), Zona Comun ($1/mt), and down in Houston and Los Angeles ($4/mt) and New York ($2/mt)
- LSMGO prices down in Houston ($6/mt), Balboa ($5/mt), New York and Los Angeles ($4/mt) and Zona Comun ($3/mt)
- HSFO380 prices down in New York ($23/mt), Los Angeles ($5/mt), Balboa ($4/mt) and Houston ($2/mt)
New York’s HSFO380 price has come off considerably, lowering it to parity with prices in Norfolk and Houston. LSMGO is also similarly priced between New York and Houston, while VLSFO is tight for prompt dates in New York and priced $13/mt higher than in Houston.
Supply of HSFO380 remains tight in US West Coast ports including Los Angeles, Vancouver and San Francisco. Los Angeles’ price is at a wide premium of over $30/mt over Balboa on Panama’s Pacific side.
Brazilian ports have good availability of VLSFO and continue to offer the grade below that in Argentina’s Zona Comun anchorage. Sao Sebastiao, Rio Grande and Paranagua are at $13-17/mt discounts to Zona Comun. Rio de Janeiro and Niteroi are at $27-28/mt discounts. And Santos – South America’s biggest container port – prices the grade $42/mt lower than Zona Comun.
Prompt deliveries of VLSFO and LSMGO are also possible in Zona Comun, where the earliest delivery date is 2-3 days out.
Brent
ICE Brent September futures are down by $0.74/bbl on the day, to $75.43/bbl at 09.30 CST (14.30 GMT) today.
Concerns over tightening crude supply pushed Brent to fresh multi-year highs of nearly $78/bbl earlier in the session, before the futures contract traded sharply down again. Brent has been volatile and trading in wide range of $3.54/bbl today, following yesterday’s OPEC+ dispute.
OPEC+ talks were postponed from last week, and called off altogether yesterday, after a clash between Saudi Arabia and the UAE over the group’s output policy.
The UAE seeks to rejig its baseline production level to allow for higher production, and rejected a proposal to extend part of the group’s output cuts beyond April next year. Saudi Arabia pushed to extend the output agreement to the end of next year.
No new date has been set for resumption of negotiations, but a new meeting could take place in time for an agreement on a further unwinding of the group’s production cuts from August. OPEC+ sketched out a plan to increase production by 2 million b/d from August to December in 400,000 b/d increments.
Several scenarios are possible if a deal is not struck in time. Without a concerted OPEC+ output increase from August, global crude stockpiles could be drawn down faced with recovering demand as countries ease Covid-19 restrictions to boost global fuel demand. Another possibility is that OPEC+ member states choose to go their own ways and produce as much as they see fit, which could trigger a price war and supply glut.