ENGINE: Europe & Africa Bunker Fuel Market Update
European and African bunker prices have largely reversed yesterday’s sharp gains by tracking tumbling Brent futures down from multi-year highs.
Changes on the day to 08.00 GMT today:
- VLSFO prices down in Durban ($20/mt), Gibraltar ($16/mt) and Rotterdam ($11/mt)
- LSMGO prices down in Gibraltar ($20/mt), Durban ($18/mt) and ($14/mt)
- HSFO prices up down in Gibraltar ($23/mt), Durban ($17/mt) and Rotterdam ($12/mt)
Price falls in ARA have been less severe than in other regional ports in response to declining crude values in the past day. This has swung Amsterdam, Rotterdam and Antwerp’s VLSFO prices to premiums of $4-5/mt over Hamburg, and $5-10/mt over Skaw and Gothenburg.
Poland’s Gdansk and Gdynia and Russia’s St. Petersburg are also offering the grade below ARA levels today.
Gibraltar’s price drops have also outpaced those in ARA. Its VLSFO premium over Rotterdam has narrowed by $5/mt to $9/mt.
Strong winds from the west and high swell could disrupt bunkering in Gibraltar Strait ports from tomorrow afternoon, port agency MH Bland. The bad weather is forecast to intensify in strength on Friday.
Bunker congestion is slightly heavier than yesterday in Gibraltar, where four vessels are waiting and a supplier is running 4-6 hours behind on its barge schedule this morning.
Malta remains the Mediterranean’s lowest-priced port for VLSFO, pricing the grade at a $5/mt discount to Gibraltar. Sarroch presents another option for VLSFO that is only $1/mt above Malta’s level.
Port Elizabeth has high swell and strong wind gusts forecast this afternoon and tomorrow, potentially hampering bunkering at the Algoa Bay anchorage then. The port’s VLSFO price has flipped to a discount to Durban again. It is now $8/mt below Durban, and $11/mt below Richards Bay. Mauritius’ Port Louis has VLSFO $20/mt below Port Elizabeth still.
Brent
The ICE Brent September futures contract has tumbled $2.69/bbl lower on the day, to $75.07/bbl at 08.00 GMT.
Brent initially surged to multi-year intraday highs of nearly $78/bbl yesterday, amid supply concerns in the wake of an impasse between Saudi Arabia and the UAE during their monthly output meeting. The two OPEC+ members clashed over whether some of the group’s output cuts should be extended from April 2022 to the end of that year. They also disagreed over the UAE’s request to update its baseline production date from October 2018, from when production quotas were set.
The OPEC+ plan to increase output by 400,000 b/d per month between August and December has been put on ice until a new meeting is called.
Brent later retreated on the prospect that some OPEC+ members will take back unilateral initiative in the absence of a consensus in the group, and pump more barrels.
A stronger US dollar is also weighing on Brent and other dollar-denominated commodities. The dollar has risen to near three-month highs against other currencies ahead of a Federal Reserve meeting which could confirm it intends to increase interest rates in 2023, as it signalled in a meeting last month. That would be an earlier tightening of monetary policy than initially thought.