VLSFO prices have been propelled by Brent to seven-week highs in major global bunkering hubs.
Changes on the day from Friday, to 08.00 GMT today:
- VLSFO prices up in Rotterdam ($18/mt), Gibraltar ($9/mt) and Durban ($6/mt)
- LSMGO prices up in Rotterdam ($18/mt), Gibraltar ($13/mt), and down in Durban ($14/mt)
- HSFO prices up in Rotterdam ($11/mt) and Gibraltar ($8/mt)
VLSFO prices are at their highest in Singapore, Fujairah, Rotterdam and Gibraltar since late July. Big increases for Brent crude futures have been behind most of the upswing for VLSFO prices, but price gains have varied across global ports.
Rotterdam’s VLSFO price has regained 13% since it bottomed out at $455/mt on 21-22 August – the same percentage gain as Brent over that period.
VLSFO prices in Gibraltar (16% up) and Singapore (14% up) have performed better than Brent, while Fujairah’s price (11% up) has gained by less.
Higher-priced stems have pushed Rotterdam’s VLSFO and LSMGO prices up relative to other ports since Friday. A price jump for VLSFO has narrowed its VLSFO discount to Gibraltar by $9/mt, to $17/mt.
There is some congestion in Gibraltar this morning, with four vessels waiting either for lack of space in the port or for a bunker barge to become ready, says port agent MH Bland. A supplier is running 3-5 hours behind schedule in Gibraltar and Algeciras. Another supplier is delayed by up to half a day.
The Mediterranean has calm weather and seas forecast for the coming week. Bunker fuels are mostly readily available, although a supplier in Istanbul has had tight availability of all grades in recent days.
Lead times of around six days should be considered for HSFO380 stems in the Canary Islands, where a supplier has yet to replenish stocks after it intentionally destocked to free space for higher-value low sulphur products several months ago. The high sulphur grade is more readily available in Gibraltar and the ARA.
Brent
Front-month ICE Brent has gained $0.99/bbl on the day since Friday, to $73.42/bbl at 08.00 GMT today.
Brent has climbed to fresh six-week intraday highs as nearly half of crude oil production in the Gulf of Mexico remains shut in, while most Louisiana refineries have normalised operations or at least restarted.
The production halt has contributed to draw commercial US crude oil inventories down to their lowest point since September 2019, data from the Energy Information Administration (EIA) showed last week. Gasoline and distillate inventories were also heavily down last week, after a week of reduced refinery production.
ExxonMobil’s 520,000 b/d Baton Rouge refinery and Marathon’s 565,000 b/d Garyville refinery – Louisiana’s two biggest – were knocked offline by Hurricane Ida two weeks ago, but have now resumed to normal operations, Argus Media reports. Four refineries in Alliance, Norco, St. Charles and Meraux have yet to restart.
With crude production lagging crude demand in the Gulf, ExxonMobil made a second 1.5 million bbl loan from the US’ Strategic Petroleum Reserves (SPR) last week to keep up production levels amid robust oil products demand.
China is also tapping into its strategic oil reserves, but not as much for a lack of product as to stave off inflationary price pressure for oil sold to its manufacturing industry. Oil from the reserves will be auctioned off to domestic refiners.
Investors await new oil demand outlooks from OPEC today, and from the International Energy Agency (IEA) tomorrow. Two OPEC+ sources cited by Reuters said OPEC will likely revise down its demand forecast for 2022, which is more optimistic about demand growth than forecasts by the IEA and EIA.