Bunker prices have slipped from yearly highs in Europe and Africa, tracking a $2/bbl Brent drop amid renewed global oil demand concerns and profit-taking among investors.
Changes on the day to 08.00 GMT today:
- VLSFO prices down in Durban ($17/mt), Gibraltar ($11/mt) and Rotterdam ($8/mt)
- LSMGO prices up in Gibraltar ($3/mt), and down in Durban ($11/mt) and Rotterdam ($11/mt)
- HSFO prices steady in Gibraltar, and down in Rotterdam ($5/mt)
Congestion has built in Gibraltar, where seven vessels are in line waiting for bunker barges to become ready to supply them this morning, MH Bland says. Two suppliers are delayed by around half a day.
The vessels could have been diverted from Las Palmas, which has been pummelled by high swells and seen bunkering restricted to inner anchorage. Certain suppliers have been delayed by at least a day.
Las Palmas is forecast with strong swells until Sunday, which could put significant pressure on the more limited space in the port’s inner anchorage, and potentially push deliveries to Gibraltar Strait ports and Tenerife.
Swells are forecast to push above 2.5 metres also in Tenerife today, but as they come in from the north, the port is likely to be sheltered in its location on the southern side of Tenerife island.
Las Palmas VLSFO price has moved up to parity with Gibraltar today, while its LSMGO and HSFO380 prices are $3/mt and $9/mt higher, respectively.
HSFO380 can be in tight supply for prompt delivery dates in the Canary Islands, with fewer suppliers stocking the grade than in the Gibraltar Strait.
Brent
Front-month ICE Brent has shed $2.00/bbl on the day, to $78.27/bbl at 08.00 GMT today.
Buying interest in the futures contract has waned after doubts about demand has resurfaced with the power crunch in China and an indicative build in US crude inventories.
Chinese power plants are running low on coal, which makes up a large share of feedstock for power generation. The shortage has triggered widespread rationing and millions of household have been affected. Investment bank Goldman Sachs estimates that nearly half of China’s industrial activity could feel the crunch, and has shaved 0.40% off its GDP growth forecast for China this year, now expecting growth at 7.80%.
How this will impact oil demand in China – the world’s biggest importer – is unclear. Diesel and other fuels could replace coal as feedstock for power generation and support prices, while lower overall growth and economic activity could dent fuel demand.
Brent was trading at three-year highs of more than $80/bbl before pulling back down below that mark yesterday.
“It’s likely that profit-taking is behind yesterday’s rejection after a good rally but we may have some stagnation around this level as investors weigh up where to go next,” says DailyFX analyst Daniela Sabin Hathorn.
Brent has also come under pressure from this week’s American Petroleum Institute (API) report showing a surprise build in US crude stocks. The stocks regained 4.13 million bbls to end seven weeks of draws. Gasoline and distillate fuel stockpiles grew, too, in a sign of lower demand, according to the indicative data, which normally precede official Energy Information Administration (EIA) figures by a day.
The EIA is due to release its weekly report today at 14.30 GMT.