Americas Market Update 2 Feb

Bunker fuel prices have declined, and operations at GOLA may face disruptions until Wednesday.

IMAGE: Boats docked at the Marina on Galveston Island. Getty Images.

Changes on the day to 07.00 CST (13.00 GMT) today:

• VLSFO prices down in Zona Comun ($45/mt), New York ($30/mt), Houston and Balboa ($27/mt)
• LSMGO prices down in Houston ($81/mt), Balboa ($70/mt) and New York ($67/mt)
• HSFO prices down in New York ($33/mt), Balboa ($32/mt) and Houston ($28/mt)

Bunker fuel prices have heavily plunged over the past session, tracking Brent’s downward movement.

Houston’s LSMGO price has taken the biggest hit and is currently at a discount of $84/mt to New York.

A lower-priced 150-500 mt LSMGO stem, fixed at the port over the weekend at $738/mt, may have put additional downward pressure on the benchmark.

Bunker fuel demand in Houston is normal, and recommended lead times for all three conventional fuel grades remain unchanged from last week at 6–10 days.

The US Gulf region is currently in its fog season.

At the Galveston Offshore Lightering Area (GOLA), possible disruptions and delays to bunkering operations are expected until 4 February due to high winds and high seas, a source said. Operations at the anchorage are currently underway on a first-come, first-served basis.

Brent

The front-month ICE Brent contract has lost by $4.53/bbl on the day from Friday, to trade at $65.90/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure:

Brent has retained some ground after official drilling figures showed steadiness in US oil rigs. The total number of oil rigs remained unchanged over the week at 411, according to Baker Hughes.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening, or expected to happen, in the shale sector.

In a tight market, any signal of reduced future supply can put upward pressure on Brent’s price.

Downward pressure:

Brent crude’s price has plunged by nearly $5/bbl at the start of this week, following reports that negotiations between Washington and Tehran have progressed.

US President Donald Trump said Iran is “seriously talking” with Washington, Reuters reported.

“The distinct shift in his [Trump’s] messaging has eased concerns of supply disruptions,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

The news has eased geopolitical tensions with the OPEC member that could cut supply from the market, analysts said.

“The selloff follows reports of fresh US-Iran negotiations, raising the possibility of a deal and easing geopolitical risk premium,” two analysts from ING Bank said.

By Gautamee Hazarika and Aparupa Mazumder

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