19 July 2021
Bunker prices are tracking a 1% Brent price drop down as OPEC+ is set to increase output from August.
Changes on the day to 08.00 GMT today:
VLSFO prices down in Gibraltar ($16/mt), Rotterdam and Durban ($6/mt)
LSMGO prices down in Rotterdam ($16/mt), Gibraltar ($14/mt) and Durban ($12/mt)
HSFO prices down in Rotterdam ($5/mt) and Gibraltar ($4/mt)
Gibraltar’s VLSFO price has flipped to a discount of $5/mt to Rotterdam. Gibraltar’s price is typically at premiums of around $20/mt, but has been pricing the grade more competitively to ARA ports this month. Low demand and ample supply has weighed on prices in the Gibraltar Strait recently.
There is no congestion in Gibraltar, Algeciras and Ceuta this morning, according to port agency MH Bland. Last week’s delays in Las Palmas have come down and bunkering is going ahead as normal with calmer seas now.
Skaw, Gothenburg and Hamburg are also pricing VLSFO at competitive levels to ARA. Hamburg’s price has dropped to parity with the Dutch bunkering hub, while Skaw and Gothenburg’s prices are at discounts of around $5/mt.
Sapref’s Durban refinery remains offline following riots and threatened security last week. The refinery, South Africa’s largest, produces bunker fuels for Durban and other South African ports. Durban and Richards Bay’s VLSFO and LSMGO prices rose sharply at the end of last week, and Durban’s price drops today have been less steep than in Rotterdam and Durban.
Brent
Front-month ICE Brent has come down by $0.78/bbl on the day since Friday, to $72.63/bbl at 08.00 GMT.
Brent has fallen to six-week lows as OPEC+ has reached a deal to break the deadlock. OPEC+ will pump 400,000 b/d more oil in each month from August to December, for a total easing of 2 million b/d of cuts made last year.
The group curbed output by a historic 10 million b/d last year to prop up slumping oil prices. It has since eased cuts in gradual increments while global oil demand has recovered. The supply cut deal was initially set to expire in April next year, but has now been extended to December with a three-month pause option to allow for output cuts in the event that supply-demand dynamics change.
Output negotiations stranded earlier this month when the UAE set a baseline production update as a condition for backing a deal. After weeks of sideline negotiations to salvage the group’s pact, the UAE got a concession to adjust its baseline from May 2022, along with Saudi Arabia, Russia, Kuwait and Iraq.