Americas Market Update 25 May

Fuel prices have moved in mixed directions, and high wind gusts are expected to cause delays in bunker deliveries at Freeport.

IMAGE: The Atlantic entrance to the Panama Canal. Getty Images.

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

• VLSFO prices up in New York ($5/mt), and down in Houston ($42/mt), Zona Comun ($41/mt), Balboa ($33/mt) and Los Angeles ($4/mt)
• LSMGO prices up in Houston ($7/mt), New York and Los Angeles ($6/mt), and down in Balboa ($82/mt) and Zona Comun ($37/mt)
• HSFO prices up in Houston ($8/mt), New York ($2/mt) and Balboa ($1/mt), and down in Los Angeles ($14/mt)

Houston's LSMGO price has increased the most among the grade in the past session. This increase could be the result of a higher-priced 150-500 mt LSMGO stem, fixed at $1,292/mt, putting upward pressure on the benchmark.

This week, the port of Houston has reported strong bunker demand. Prompt fuel availability across all three conventional grades is currently tight, with lead times for HSFO and LSMGO standing at 6-8 days. VLSFO has required at least 5 days of lead time this week, a trader said.

At Balboa, the VLSFO price has dipped, while the port's HSFO price has increased, narrowing the port's Hi5 spread to $55/mt from $89/mt on Friday.

In the Bahamas' Freeport, high wind gusts in the region could disrupt operations at the anchorage and potentially delay bunker deliveries.

Delivery barges are assessing local weather and sea conditions before proceeding with operations, a source said.

Brent

The front-month ICE Brent contract has lost $5.24/bbl on the day from Friday, to trade at $98.21/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent’s price has felt little immediate upward pressure today, with market traders continuing to factor in the risk of ongoing peace talks breaking down again before a final agreement is reached.

Last week, officials from the European Union (EU) warned that oil prices are expected to remain above what they were prior to the onset of the war on 28 February, at least until the end of next year.

EU economy commissioner Valdis Dombrovskis said that higher energy prices are primarily responsible for keeping inflation elevated in Europe through 2027, the Associated Press (AP) reported.

While a peace deal between the US and Iran will offer some relief to the oil market, questions remain over how quickly oil flows through the Strait of Hormuz are to recover to pre-war levels.

“While talks continue, vessels are still trickling through the Strait of Hormuz,” ING Bank’s head of commodities strategy Warren Patterson noted. “The big unknown is how the US and Iran will resolve their differences on Iran’s nuclear programme,” he added.

Downward pressure:

Brent crude’s price has plunged at the start of this week, amid signs of progress in the ongoing ceasefire negotiations between Washington and Tehran.

US President Donald Trump wrote on social media platform Truth Social yesterday that talks with Tehran are proceeding in an “orderly and constructive manner”, putting downward pressure on oil prices.

“Crude oil prices fell… as the market pondered a peace deal between the US and Iran that could ultimately reopen the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Additionally, Baker Hughes reported a big rise in US crude oil rig activity. The total number of rigs drilling for crude oil in the US rose by 10 to 425 units last week.

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.

By Gautamee Hazarika and Aparupa Mazumder

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