Americas Market Update 20 Oct

Fuel prices have mostly moved upwards, and high wind gusts could cause delays in bunker deliveries in GOLA.

IMAGE: Heavy industrial rigs at a shipyard near Houston, Texas. Getty Images.

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

• VLSFO prices up in Houston ($19/mt), Balboa ($7/mt) and New York ($5/mt), and down in Zona Comun ($33/mt) and Los Angeles ($3/mt)
• LSMGO prices up in Houston ($13/mt) and Balboa ($3/mt), and down in Zona Comun ($80/mt), Los Angeles ($3/mt) and New York ($2/mt)
• HSFO prices up in Houston ($5/mt) and New York ($3/mt), and down in Los Angeles ($4/mt) and Balboa ($1/mt)

Houston’s VLSFO price has posted the biggest gain for the grade amongst the key ports in the Americas, widening the port’s Hi5 spread to $185/mt today from $171/mt yesterday.

High winds and rough seas could disrupt bunker deliveries at the Galveston Offshore Lightering Area (GOLA) from 20-22 October, a source said.

New York’s LSMGO price has fallen over the past day, despite Brent’s gains, but has held a premium of $134/mt over Houston’s LSMGO.

Bunker demand has been steady in New York on the East Coast, and VLSFO and LSMGO availability has been okay, with most suppliers recommending lead times of 5-7 days. HSFO has been slightly tighter and requires at least a week’s notice, a source said.

Brent

The front-month ICE Brent contract has gained $2.51/bbl on the day, trading at $110.38/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Iran has no choice but to exercise sovereignty over the Strait of Hormuz to protect its security, First Vice President Mohammad Reza Aref said yesterday, according to Iranian state news agency IRNA. He added that the US had caused the current situation and must pay for it.

Yemen’s Houthis said yesterday that they had launched missile and drone attacks on Saudi energy, airport and military targets, including an Aramco site in Yanbu and the Shaybah oilfield. Saudi authorities have not confirmed the attacks. Yanbu is Saudi Arabia’s main Red Sea export hub and lets crude bypass Hormuz.

Attacks on ships have kept a risk premium in Brent, with ship-tracking firm Kpler reporting at least 18 vessels attacked in the region over the past two weeks.

The escalation in strikes across the Middle East highlights the upside risks to oil prices, economic research firm Capital Economics said in a note last week.

Downward pressure:

Gulf crude flows have held up despite the attacks. US Energy Secretary Chris Wright told Fox News that flows had recovered to about 80% of their pre-war level, although refined product shipments remained constrained.

Iraq's crude exports have averaged more than 3.4 million b/d so far this month, its oil minister said. That is close to pre-war levels.

The US is also authorising the sale of sanctioned “dark fleet” tankers so they can carry crude legally, Wright said. The aim is to add tanker capacity and bring freight rates down, analysts at Dutch bank ING said.

If flows continue uninhibited, “the risk premium would likely erode slowly”, the analysts added, noting that there are no signs of this yet.

By Gautamee Hazarika and Erik Hoffmann

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