ENGINE: Global Bunker Fuel Market Update
Global bunker prices have mostly made moderate gains alongside Brent, while Zhoushan’s HSFO380 price has shot up amid tight availability.
Changes on the day to 08.00 GMT today:
- VLSFO prices up Singapore, Fujairah and Houston ($5/mt) and Rotterdam ($3/mt), and down in Gibraltar ($1/mt)
- LSMGO prices up in Singapore ($9/mt), Rotterdam ($7/mt), Houston ($6/mt) and Fujairah and Gibraltar ($5/mt)
- HSFO380 prices up Fujairah ($14/mt), Singapore and Houston ($4/mt), and down in Gibraltar ($3/mt) and Rotterdam ($1/mt)
Thick fog suspended inbound vessel traffic to Gibraltar this morning, but harbour crafts and bunker barges have been allowed to continue operations, port agent MH Bland said. The fog has mostly dissipated to improve visibility.
Two vessels are waiting to bunker in Gibraltar, down from four vessels yesterday. There are slight bunker delays, with three suppliers across Gibraltar and Algeciras running 2-4 hours and 12 hours after schedule.
China’s Ningbo-Zhoushan port is reported to have turned away incoming vessels as a precautionary measure to avoid Covid-19 infections after a worker tested positive in the port earlier this week. The port’s Meidong Container Terminal has been closed and all inbound and outbound traffic suspended.
While a host of vessels have been backed up waiting for entry to the port, bunkering in Zhoushan is not expected to be severely impacted, sources say. Bunker deliveries at anchorage in Zhoushan are “no touch” – there is no contact between crews on barges and ships. Bunker barges will be isolated if a crew member tests positive, and will continue to operate even as ships are turned away.
Zhoushan and Shanghai’s VLSFO prices flipped to a $2-3/mt premiums over Singapore yesterday, and have widened those premiums to $4-9/mt today.
Singapore and Fujairah’s VLSFO prices have edged higher in lockstep in the past day, keeping Fujairah at a $2/mt discount.
Recommended lead times for VLSFO remain at 7-9 days in Singapore, while Fujairah’s lead times have come down to five days. The grade is available at a shorter notice of 2-3 days in Zhoushan and Shanghai.
HSFO380 has tightened in Zhoushan, where only two of five suppliers can currently offer the grade. Replenishment is not expected until the end of the month, but the two suppliers that have stocks can deliver from 18-20 August.
Zhoushan’s HSFO380 price has surged this week, catching up with Fujairah’s price, which spiked amid tight availability last week. Zhoushan’s HSFO380 premium over Singapore has shot up from $4/mt on 5 August, to $38/mt now.
Brent
Front-month ICE Brent crude has risen by $0.75/bbl on the day, to $71.58/bbl at 08.00 GMT.
Brent has come up from a low of $68/bbl on Monday, recovering from the slump triggered by Chinese lockdown measures.
Yesterday’s weekly figures from the Energy Information Administration (EIA) showed a draw of commercial US crude oil inventories last week, but by a lower-than-expected 448,000 bbls. Downward price pressure from the modest crude draw was countered by a sizeable gasoline draw of 1.40 million bbls, which brought the country’s gasoline stocks to their lowest since February.
The US has called on OPEC and allies, known as the OPEC+ group, to phase its oil output cuts back into the market at a faster pace than the current 400,000 b/d per month the group has committed to.
US authorities are concerned that global undersupply will push crude and transport fuel prices to new highs in coming months. Higher gasoline prices add inflationary pressure, a key concern for the US as it steers its economy further out of the pandemic trough.
“We imagine that there will be quite a lot of reluctance from the Saudis and the broader group to increase output further, particularly given continued uncertainty over the spread of the delta variant,” ING strategists Warren Patterson and Wenyu Yao commented.
“We will need to see how much pressure the US is willing to put on Saudi Arabia in order to see them further opening the taps.”