Americas Market Update 5 Feb

Fuel prices have shown mixed movements, while HSFO availability in Houston is expected to tighten this week.

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

• VLSFO prices up in Houston ($6/mt) and Los Angeles ($5/mt), and down in Zona Comun ($4/mt), New York and Balboa ($2/mt)
• LSMGO prices up in Houston ($23/mt), Los Angeles ($7/mt) and Zona Comun ($2/mt), and down in Balboa ($7/mt)
• HSFO prices up in Los Angeles ($4/mt), Houston ($3/mt) and Balboa ($1/mt), and down in New York ($1/mt)

Prices at the port of Houston recorded the highest gains for both LSMGO and VLSFO over the past session.

HSFO is tightening at the port for prompt supply, with most suppliers recommending lead times of at least a week. Meanwhile, VLSFO and LSMGO can be delivered within 5-7 days, a source said.

At the Galveston Offshore Lightering Area (GOLA), bunkering operations may be disrupted between 5-6 February amid forecasts of high seas and strong wind gusts.

Los Angeles, meanwhile, recorded the highest gain for HSFO and is currently at premiums of $87/mt to Houston and $55/mt to New York.

Availability for HSFO at the port is okay, with most suppliers able to deliver all three conventional fuel grades within 6-7 days.

In Argentina's Zona Comun, bunker demand has increased following the lifting of restrictions on vessels on the amount of fuel that can be bunkered, a source said.

Lead times for both VLSFO and LSMGO are within 7 days.

Brent

The front-month ICE Brent contract has gained by $0.45/bbl on the day, to trade at $67.95/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure:

Brent crude prices have edged higher, following the release of the US Energy Information Administration’s (EIA) weekly oil inventory data.

US commercial crude oil inventories fell by 3.5 million bbls to 420.3 million bbls in the week ending 30 January, according to the EIA. Declining inventories are widely interpreted as a sign of stronger demand.

“Sentiment was also boosted by a drop in inventories,” said Daniel Hynes, senior commodity strategist at ANZ Bank.

“The US Energy Information Administration’s weekly report for the week to January 30 was bullish on balance,” added Vandana Hari, founder of VANDA Insights.

Additional support for Brent futures has come from a trade agreement between the US and India, which has raised expectations of firmer global energy demand.

Downward pressure:

Oil prices have come under modest downward pressure after the US and Iran agreed to hold talks in Oman on Friday, easing fears that a possible military confrontation could disrupt oil supplies from the strategically important Middle East, Reuters reported.

Crude futures lost momentum “after the US and Iran agreed to hold talks on Friday, following earlier indications that negotiations had been called off amid differences over the venue and agenda,” said Vandana Hari, founder of VANDA Insights.

Additional pressure has come from a stronger US dollar and heightened volatility in precious metals.

A firmer dollar typically weighs on oil prices by making dollar-denominated commodities more expensive for buyers using other currencies, which can dampen demand.

By Gautamee Hazarika and Tuhin Roy

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