Americas Market Update 26 Jan

Prices across the Americas have moved in mixed directions, and Houston is facing weather disruptions.

IMAGE: An LPG tanker sailing west along the Houston Ship Channel on the way to Galveston Bay. Getty Images

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

• VLSFO prices up in Houston, Zona Comun ($14mt) and Balboa ($5/mt), and down in New York ($8/mt) and Los Angeles ($4/mt)
• LSMGO prices up in Balboa ($9/mt) and Houston ($3/mt), and down in Los Angeles ($7/mt), New York ($4/mt) and Zona Comun ($1/mt)
• HSFO prices up in Balboa ($3/mt), and down in Los Angeles ($4/mt), New York ($3/mt) and Houston ($2/mt)

Houston’s VLSFO price has recorded significant gains over the past session. Its discount to New York has shrunk to $32/mt, and to Balboa to $15/mt.

Cargo operations were suspended at the end of last week in Houston amid freezing temperatures and icy roads preventing trucks from handling cargoes. Vessel operations are expected to resume at the Baytown and Barbours Cut terminals at 19.00 local time today, Houston Port Authority says. All operations are set to resume by 06.00 local time tomorrow.

Houston bunker suppliers have recommended lead times of 6-10 days for deliveries, and bunker demand at the port has remained steady, according to a trader.

At the Galveston Offshore Lightering Area (GOLA), bunker operations have been suspended today but are expected to resume later this afternoon, according to a source. Disruptions are again expected on 30-31 January and major delivery delays could ensue from prolonged suspensions, according to a source.

Lead times of more than five days have mostly been recommended for any of the three conventional fuel grades this week, a source said.

Brent

The front-month ICE Brent contract has gained by $0.53/bbl on the day from Friday, to trade at $65.77/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure:

Oil prices have found fresh support as harsh winter weather has disrupted production across key US crude-producing regions. Around 250,000 b/d of output has been knocked offline due to severe cold, with declines reported in the Bakken field in Oklahoma and parts of Texas, Reuters reported citing JPMorgan analysts.

“Colder weather will also boost demand prospects for heating fuels, as reflected in the strength in heating oil cracks,” analysts from ING Bank said.

Beyond weather-related factors, market participants remain alert to geopolitical risks, as tensions between the US and Iran continue to unsettle sentiment.

“Further support for the oil market will be driven by lingering geopolitical risks. The US is sending ships to the Middle East, raising concerns about an escalation with Iran,” ING Bank’s analysts commented.

Downward pressure:

The total number of rigs drilling for crude oil and natural gas in the US rose by one to 544 units last week, Baker Hughes reported.

The US oil rig count is widely viewed as an indicator of future oil production, as it signals the level of current and expected drilling activity in the shale sector.

In an already oversupplied market, any indication of higher future output can weigh on Brent prices.

By Samantha Shaji and Tuhin Roy

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