Bunker prices are tumbling in key European and African ports, tracking Brent down as a four-day rally has come to an end on the prospect of a breakthrough in the OPEC+ impasse.
Changes on the day to 08.00 GMT today:
VLSFO prices down in Gibraltar ($31/mt), Durban ($23/mt) and Rotterdam ($22/mt)
LSMGO prices down in Gibraltar ($34/mt), Durban ($28/mt) and Rotterdam ($23/mt)
HSFO prices down in Rotterdam ($16/mt) and Gibraltar ($15/mt)
Gibraltar’s VLSFO premium over Rotterdam has halved to $8/mt now. A sharp price drop in Gibraltar also brought its price to a $4/mt discount to Malta, after having been at a premium.
There is no congestion or bunker delays in Gibraltar or Ceuta today, while suppliers in Algeciras have minimal delays of 2-4 hours, according to local port agent MH Bland.
Delays persist in Las Palmas, after high swell from the north complicated bunkering at outer anchorage yesterday. The swell has dropped down below 2 metres today, but may still threaten bunker deliveries. Bunkering is proceeding as normal in Tenerife, which is more sheltered against rough weather from the north.
Railway and road links to Richards Bay and Durban have been shut by ongoing protests and mass violence in South Africa’s KwaZulu-Natal province. Port operations at Richards Bay were halted on Monday, and operations at Durban have been severely restricted as port workers have not been able to access their workplace.
Sapref’s Durban refinery was forced to halt operations yesterday. The 180,000 b/d nameplate capacity refinery is South Africa’s biggest and has been a lifeline caterer for South African fuel demand since two of the country’s other refineries were forced offline by fires and an explosion last year.
Operations in the ports of Cape Town and Port Elizabeth, and at the Algoa Bay anchorage off Port Elizabeth, have not been directly affected. But with domestic bunker fuel production capacity now all but gone, these ports will likely have to rely on imports, which they increasingly have done in the past year.
Brent
Front-month ICE Brent is down by $2.62/bbl on the day, to $73.67/bbl at 08.00 GMT.
The futures contract fell amid news of a compromise between Saudi Arabia and the UAE that could develop into a deal for OPEC+ to supply more crude. The parties have made progress in negotiations, but a deal is not there quite yet, the UAE’s energy minister said in a statement yesterday.
“It seems OPEC+ will shortly have a plan to raise output and that is welcomed news, as surging demand had oil market getting too tight,” OANDA market analyst Ed Moya said in a note.
Saudi Arabia and the UAE have locked horns for two weeks over the UAE’s claim to have its baseline production quota updated from October 2018 now that it has greater production capacity.
The market reacted to news of a breakthrough by selling off to de-risk their positions in expectation of an imminent deal that could see OPEC+ pump another 2 million b/d of oil between August and December, and extend their supply restraint management pact from April 2022 to the end of 2022.
Builds in US gasoline and distillate stocks pointed to a slowdown in transport and industrial fuel demand. The builds weighed on oil prices even as US commercial crude oil stocks were heavily drawn again and brought down to their lowest level since January 2020.