Bunker prices have slumped to two-week lows in major East of Suez ports, as Brent fell below $70/bbl earlier today under pressure from a build in US crude stocks and lockdown measures in China.
Changes on the day to 16.00 SGT (08.00 GMT) today:
- VLSFO prices down in Fujairah ($20/mt), Zhoushan ($18/mt) and Singapore ($17/mt)
- LSMGO prices down in Fujairah and Zhoushan ($20/mt) and Singapore ($19/mt)
- HSFO380 prices down in Zhoushan ($14/mt), Singapore ($11/mt) and Fujairah ($3/mt)
Fujairah’s VLSFO price has dropped to wider discounts of $6-8/mt to Singapore and Zhoushan.
HSFO380 is tight in Fujairah and the earliest expected delivery date is 17 August. Supply has tightened in Fujairah after the number of suppliers carrying the grade were reduced from four to three last month.
There is also less fuel oil overall in the UAE port this week, as its heavy distillate and residual fuel oil inventories fell by 10% in the week to 2 August, to a four-month low of 10.14 million bbls, according to Fujairah Oil Industry Zone and S&P Global Platts figures.
Tight supply has pushed its price to bigger premiums of $41-46/mt over Singapore and Zhoushan. Its price has also risen further against other Middle Eastern ports in the past day, including $18-20/mt premiums over Basra and Port Suez.
VLSFO and LSMGO can be found on a shorter notice of around a week ahead in Fujairah.
Brent
Front-month ICE Brent has tumbled $2.30/bbl lower on the day, to $70.66/bbl at 16.00 SGT (08.00 GMT).
Brent traded down after the weekly Energy Information Administration (EIA) report showed a surprise build in US crude stocks when it was released yesterday.
“The official US Crude Inventories delivered the knockout punch as they surprised markets by rising by 3.626 million barrels…Markets completely ignored an equally significant tumble in gasoline stocks of -5.3 million barrels,” OANDA analyst Jeffrey Halley said today.
US gasoline stocks fell 2% on the week in a sign of robust road fuel demand. A 2% drop in gasoline production and increased supply in the Gulf Coast region weighed on the country’s total stocks. East Coast stocks were also heavily drawn.
China has halted travel in and out of several cities and cancelled flights to contain the rapid resurgence of Covid-19 cases in the country. According to Chinese authorities, infection rates had been nearly flat in recent months, until the more transmissible Delta variant started ripping through the country last month. 71 new daily cases were reported across 17 provinces on 3 August – the most since January.
This is far short of the thousands of new cases reported in many other large countries, including the 150,000 new cases in the US on 3 August. But unlike the US, China has imposed mobility restrictions on millions of people. The measures will dent fuel demand from the world’s biggest oil importer, but the extent will depend on how long and how extensive they will be.