Americas Market Update 31 July

Fuel prices across the Americas have moved in mixed directions, while marine warnings are in effect across the Caribbean due to rough weather conditions.

IMAGE: Houston Ship Channel. Port Houston

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

• VLSFO prices up in New York, Los Angeles ($7/mt) and Balboa ($4/mt), and down in Zona Comun ($28/mt) and Houston ($14/mt)
• LSMGO prices up in Los Angeles ($33/mt) and New York ($19/mt), unchanged in Houston, and down in Balboa ($11/mt)
• HSFO prices up in New York ($3/mt), and down in Houston ($42/mt), Balboa ($25/mt) and Los Angeles ($8/mt)

Houston's VLSFO price has decreased over the past day, after a lower-priced, 150-500 mt stem, booked at $700/mt, put downward pressure on the benchmark.

Availability at the port is decent, with most suppliers recommending lead times of 5-7 days for HSFO and VLSFO. LSMGO can be delivered within 3-4 days, a trader said.

New York has recorded gains across all three conventional fuel grades, tracking Brent's upward movement.

Fuel demand in New York has been steady. HSFO and LSMGO availability is normal with lead times of 3-7 days, while VLSFO requires at least five days, a source said.

In the Caribbean, the National Hurricane Center has issued marine warnings due to high wind gusts and rough seas. This could result in some delays across bunkering hubs in the Caribbean, a trader said.

Brent

The front-month ICE Brent contract has gained $0.35/bbl on the day, to trade at $90.40/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent crude’s price is poised to end this month almost 20% higher than June, as the crisis in the Middle East continues to escalate.

Echoing Iran’s playbook in the Strait of Hormuz, Yemen’s Houthi militants are planning to impose a toll fee on commercial vessels attempting to transit the Bab al-Mandeb Strait into the Red Sea.

“Tanker traffic through the Bab al-Mandeb Strait has slowed, given the risk of attack from the Houthis in Yemen,” two analysts from ING Bank noted.

Bab al-Mandeb is another vital oil chokepoint, like the Strait of Hormuz, carrying about 7% of global seaborne oil flows.

Fresh attacks in the region threaten to deepen the global energy crisis, as traffic through the Strait of Hormuz is already facing severe disruption.

Downward pressure:

The drop in Brent’s price comes despite little improvement in tensions between the US and Iran.

According to market analysts, the weakness in oil prices can be attributed to the slightly improved vessel traffic through the Strait of Hormuz.

“Though [vessels transiting through the strait] still in single digits, there are also reports that the shuttling of oil across the strait has resumed,” ING Bank’s analysts remarked.

‘Shuttling of oil’ refers to tankers making short-distance trips to move crude oil across or out of the Persian Gulf, often to transfer it to larger vessels or bypass disrupted areas.

“This will not be detected by tracking data, given that transponders will be turned off,” ING Bank’s analysts said.

Moreover, US energy secretary Chris Wright claimed in an interview with Bloomberg that 13 million b/d of oil left the Persian Gulf over the past week

Considering Wright's claim - with roughly half moving through the strait and the remainder diverted through bypass pipelines - ING Bank’s analysts noted that this volume still translates to roughly 65% of pre-war levels.

By Gautamee Hazarika and Aparupa Mazumder

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