Americas Market Update 14 May

Fuel prices have moved downward, while bunker demand in Houston remains strong this week.

IMAGE: Aerial view of the Port of Houston, Texas. Getty Images.

Changes on the day to 08.00 CDT (13.00 GMT) today:

• VLSFO prices down in Zona Comun ($61/mt), Balboa, Los Angeles ($24/mt), Houston ($20/mt) and New York ($7/mt)
• LSMGO prices down in Zona Comun ($63/mt), Balboa ($35/mt), New York ($32/mt), Houston ($31/mt) and Los Angeles ($25/mt)
• HSFO prices down in Balboa ($20/mt), Houston ($16/mt), New York ($13/mt) and Los Angeles ($12/mt)

Fuel prices have tracked Brent's downward movement across all ports in the past day.

Houston's VLSFO price benchmark has declined by $20/mt and is currently at a $19/mt premium to New York and a discount of $211/mt to Los Angeles.

The port's HSFO price has declined after two lower-priced 150–500 mt HSFO stems were booked at the port at $655/mt and $650/mt, putting downward pressure on the benchmark.

Bunker demand is strong, and recommended lead times for HSFO and VLSFO are around 8–10 days in Houston this week. LSMGO availability is comparatively better, with lead times of 6–7 days.

Off Trinidad, bunker deliveries are currently facing suspensions due to strong wind gusts and elevated sea conditions. Rough weather is forecast to persist through 17 May, and prolonged delays are possible, a bunker trader tells ENGINE.

Brent

The front-month ICE Brent contract has lost $2.47/bbl on the day, to trade at $105.00/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent’s price has found some support after the US Energy Information Administration (EIA) reported a decline in US crude stocks.

Commercial US crude oil inventories decreased by 4.3 million bbls to 452.9 million bbls in the week ending 8 May, according to data from the EIA.

“In the US, EIA weekly data continued to show a tightening in the domestic oil market,” two analysts from ING Bank said. “The draw is driven by continued strength in crude oil exports,” they said.

The American Petroleum Institute (API) reported a 2.2 million bbl-decline the previous day.

A decline in US crude stocks typically indicates improvement in demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Brent’s price has moved lower ahead of US President Donald Trump’s meeting with Chinese counterpart Xi Jinping this week.

“The oil market is eagerly awaiting the outcome of the meeting between President Trump and President Xi, and whether it could yield some positive results on the Iran war,” ING Bank’s analysts said.

The meeting – during Trump’s state visit to Tiananmen Square in Beijing – is expected to include high-level discussions on the rapidly evolving Middle East situation, while also laying the groundwork for deeper long-term cooperation between the two sides.

Some market participants hope China can pressure Iran into reaching an agreement with the US that will potentially end the conflict and allow energy flows through the Strait of Hormuz to resume.

“The market could be pinning too much hope on the US-China talks yielding some positive results on Iran,” ING Bank’s analysts added.

By Gautamee Hazarika and Aparupa Mazumder

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