Americas Market Update 6 Nov

Fuel prices have moved in mixed directions, and operations are likely to be suspended in GOLA over the weekend.

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

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

• VLSFO prices up in Los Angeles ($1/mt), and down in New York ($6/mt), Balboa ($5/mt), Zona Comun ($4/mt) and Houston ($1/mt)
• LSMGO prices up in Zona Comun ($64/mt), unchanged in New York, and down in Balboa ($57/mt), Los Angeles ($24/mt) and Houston ($7/mt)
• HSFO prices up in Balboa ($5/mt), and down in Los Angeles ($20/mt), Houston ($16/mt) and New York ($7/mt)

Houston's VLSFO prices has declined only by $1/mt over the past day, while the port's HSFO price has declined by $16/mt. This has widened the port's Hi5 spread to $218/mt today from $203/mt on Thursday.

Houston's Hi5 spread has stayed above $175/mt since late July, more than double where it was at the start of the year.

Bunker demand has been steady in Houston, a trader said. Recommended lead times for HSFO and LSMGO are 5-7 days, while VLSFO deliveries require around seven days’ notice.

The US Gulf Coast has entered its sea fog season, with dense fog potentially causing delays and disruptions to port operations, the trader said.

High seas and strong wind gusts are forecast in the Galveston Offshore Lightering Area (GOLA) on 8 November, which could lead to a suspension of bunkering operations due to adverse sea conditions.

Brent

The front-month ICE Brent contract has gained $0.56/bbl on the day, trading at $98.19/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure

Ongoing concerns over Middle Eastern oil supplies amid the conflict continue to support Brent crude futures.

Prices rebounded following a surge in tanker attacks in the Gulf and the Strait of Hormuz on Wednesday and Thursday. Renewed attacks in the strait, a critical maritime passage through which most Middle Eastern oil shipments transit, have heightened concerns over potential disruptions to regional supply flows, Reuters reported.

“The market has a habit of trying to sprint to the final chapter while the fighting is still on page one… Then comes another reminder from the Strait of Hormuz that wars do not end because the market grows tired of carrying the headline risk,” said SPI Asset Management managing partner Stephen Innes.

Brent crude has also drawn support from a further decline in US crude and fuel inventories. Commercial crude stocks in the US fell by 865,000 bbls to 409.8 million bbls in the week ended 30 October, according to the US Energy Information Administration (EIA).

Downward pressure

Meanwhile, expectations of a possible de-escalation in the US-Iran conflict have exerted downward pressure on oil prices following election losses for US President Donald Trump's party.

“Brent, the global benchmark had come under pressure as the market contemplated what a Democrat sweep in US midterms elections would mean for the Middle East conflict,” said ANZ Bank senior commodity strategist Daniel Hynes.

“The political centre of gravity in Washington has shifted after the Democratic sweep, and that raises a much more awkward question for the White House: not whether it can launch another strike, but whether it still has the domestic room to sustain the war,” Innes said.

By Gautamee Hazarika and Tuhin Roy

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