Americas Market Update 5 Jan

Bunker fuel prices have largely moved up, and the Houston Ship Channel and Galveston Bay could face shutdowns due to dense fog.

IMAGE: Boats docked at the Marina on Galveston Island. Getty Images

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

• VLSFO prices up in Zona Comun ($15/mt), Balboa ($10/mt), Houston, Los Angeles ($7/mt) and New York ($2/mt)
• LSMGO prices up in Zona Comun ($39/mt), Los Angeles and Houston ($8/mt), and down in Balboa ($12/mt) and New York ($6/mt)
• HSFO prices up in Los Angeles ($5/mt) and Balboa ($2/mt), and down in New York ($9/mt) and Houston ($7/mt)

Houston’s VLSFO price has gained $7/mt, while the port’s HSFO price has fallen by the same amount, widening the port’s Hi5 spread by $12/mt to $63/mt.

The US Gulf Coast region is currently in fog season. Dense fog could prevent shipping traffic through parts of the Houston Ship Channel and Galveston Bay until Wednesday, a ship agent has informed.

Bunker deliveries in the Galveston Offshore Lightering Area (GOLA) are currently underway, but are expected to be suspended shortly due to high seas, a source has said.

Zona Comun's LSMGO price has recorded the largest gain over the past session and is currently at a $47/mt premium over that in Bahia Blanca.

Availability of VLSFO and LSMGO remains good at the Zona Comun anchorage, with most suppliers delivering both grades within lead times of 5-7 days in the past week.

The anchorage has been experiencing normal weather conditions, which are expected to persist until Wednesday.

Brent

The front-month ICE Brent contract has risen by $0.44/bbl on the day from Friday, to trade at $61.19/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure:

Brent’s price has gained upward support following a major geopolitical escalation in Venezuela.

Over the weekend, US troops carried out an operation that resulted in the detention of Venezuelan President Nicolas Maduro and his wife, from the country’s capital Caracas.

Moreover, US President Donald Trump said Washington would take control of the OPEC member nation and confirmed that the US embargo on Venezuelan oil would remain in place.

Venezuela controls almost 17% of global oil reserves, or 303 billion bbls, according to Reuters. The future of its oil output now depends on how US sanctions policy develops, market analysts said.

“Any rehabilitation of Venezuela’s oil sector could take years and billions of dollars in capital,” SPI Asset Management managing partner Stephen Innes said.

Downward pressure:

The total number of rigs drilling for crude oil in the US rose by three to 412 units last week, according to Baker Hughes.

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.

In an oversupplied market, any signal of increased future supply can put downward pressure on Brent’s price.

By Gautamee Hazarika and Aparupa Mazumder

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