Americas Market Update 2 June

Fuel prices have moved in mixed directions, and bunker demand is strong in Panama.

IMAGE: The US Gulf Coast beach of Galveston, Texas. Getty Images.

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

• VLSFO prices up in Balboa ($88/mt), Houston ($15/mt) and New York ($2/mt), and down in Los Angeles ($27/mt) and Zona Comun ($14/mt)
• LSMGO prices up in Houston ($29/mt), Los Angeles ($16/mt) and New York ($8/mt), unchanged in Balboa, and down in Zona Comun ($28/mt)
• HSFO prices up in New York ($18/mt), Houston ($16/mt), Los Angeles ($9/mt) and Balboa ($2/mt)

The price of VLSFO at Balboa has surged over the past session, widening the Hi5 spread at the port to $136/mt, from $50/mt yesterday.

Prices of HSFO and LSMGO offered at the port have remained relatively stable over the same period.

In Panama, bunker demand remains strong, with fuel prices remaining more or less competitive, a trader says.

Availability for all fuel grades is normal at both ports of Balboa and Cristobal. HSFO and VLSFO can be delivered within 4-6 days. LSMGO has typically been delivered within four days over the past week.

Brent

The front-month ICE Brent contract has gained by $1.34/bbl on the day, trading at $94.30/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent’s price has felt upward pressure following reports that Iran is stepping back from the ongoing negotiations with Washington and moving ahead with a complete blockade of the Strait of Hormuz.

The breakdown in negotiations comes shortly after Israel’s military moved further inside Lebanon, raising concerns of a broader Middle East conflict.

Meanwhile, Oman’s Maritime Security Centre (MSC) issued an advisory for all vessels to exercise extreme caution after sighting a suspected floating mine in the region.

Crude oil prices can surge to $180/bbl by August if the US-Iran conflict intensifies and the Strait of Hormuz remains closed, Jorge León, head of geopolitical analysis at Rystad Energy, said in an interview with CNBC.

“Oil price direction continues to be dictated by Iran-related headlines amid considerable uncertainty over how negotiations between the US and Iran are progressing,” two analysts from ING Bank noted.

Downward pressure:

Despite the absence of significant bearish drivers, Brent’s price has declined today.

Market participants will be watching closely for any further signs of progress in US-Iran negotiations.

“President Trump says that negotiations are continuing,” ING Bank’s analysts noted.

Negotiators from both sides agreed on a draft memorandum of understanding last week to extend the ceasefire and lift restrictions on shipping through the Strait of Hormuz.

By Gautamee Hazarika and Aparupa Mazumder

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