ENGINE: East of Suez Bunker Fuel Market Update
East of Suez bunker prices are on the rise for a second day, as Brent values have jumped above $77/bbl.
Changes on the day to 16.00 SGT (08.00 GMT) today:
VLSFO prices up in Zhoushan ($10/mt), Singapore and Fujairah ($9/mt)
LSMGO prices up in Fujairah ($34/mt), Zhoushan ($9/mt) and Singapore ($5/mt)
HSFO380 prices up in Fujairah and Singapore ($4/mt), and down in Zhoushan ($8/mt)
Fujairah’s LSMGO price has seen the sharpest gain, lifted by a higher-priced stem of less than 50 mt. LSMGO is readily available in the UAE bunkering hub, as well as HSFO380 and VLSFO.
Both Singapore and Fujairah’s Hi5 spreads have widened by $5/mt on the day, to $128/mt and $121/mt respectively.
Singapore’s VLSFO availability is tighter compared to last week, requiring up to eight days ahead now. HSFO380 stems still need up to 10 days of lead time.
Bunker availability continues to be good in Zhoushan and Shanghai, with lead times at 2-3 days for all three fuel grades.
Brent
The ICE Brent September futures contract has extended its gains from the previous session by jumping $1.58/bbl higher on the day to 16.00 SGT (08.00 GMT) today, when it stood at $77.76/bbl.
Concerns over tightening crude supply has pushed Brent to fresh multi-year highs. 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.