East of Suez Market Update 1 Oct

Prices in East of Suez ports have fallen across all grades, and bunker availability is tight in Zhoushan, where lead times for VLSFO and HSFO have stretched to around 14 days.

IMAGE: Aerial view Zhoushan City, Zhejiang Province. Getty Images

Changes on the day to 17.00 SGT (09.00 GMT) today:

• VLSFO prices down in Zhoushan ($16/mt), Fujairah ($8/mt) and Singapore ($7/mt)
• LSMGO prices down in Fujairah ($21/mt), Singapore ($10/mt) and Zhoushan ($8/mt)
• HSFO prices down in Fujairah ($13/mt), Singapore ($4/mt) and Zhoushan ($2/mt)
• B30-VLSFO prices down in Singapore ($22/mt)

Zhoushan's VLSFO price has fallen by $16/mt, the steepest decrease among the three major Asian bunker ports. The price now stands at a $59/mt premium over Singapore and a $10/mt discount to Fujairah.

Consequently, Zhoushan's Hi5 spread has narrowed from $69/mt to $55/mt, as HSFO slipped by only $2/mt. The spread remains well below Fujairah's $232/mt and Singapore's $120/mt, and is Zhoushan's narrowest since at least the start of August.

Bunker availability remains tight in Zhoushan, where several suppliers are running low on stocks and delayed replenishment cargoes are further restricting supply. Lead times for VLSFO have extended to around 14 days from 10 days, while HSFO lead times have doubled from seven days to the same level as VLSFO's. LSMGO lead times have lengthened to about 10 days from seven days.

Supply conditions are uneven across other Chinese ports. Dalian and Qingdao have adequate VLSFO and LSMGO stocks, although HSFO availability remains tight in Qingdao. Tightness is also evident in southern China, where suppliers in Fuzhou and Xiamen are short of VLSFO and LSMGO, and availability of both grades remains constrained in Yangpu and Guangzhou.

Bunkering activity is expected to slow at several Chinese ports during the National Day Golden Week holiday, which runs from 1-7 October, according to a China-based source. Deliveries against existing orders are expected to continue as normal, but the deadline for placing stem orders for delivery during the holiday passed on 28 September at most ports.

Brent

The front-month ICE Brent contract has declined by $3.04/bbl on the day, to trade at $100.63/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has felt some upward pressure after US President Donald Trump rejected claims of easing economic sanctions on Tehran by releasing frozen Iranian funds.

The US President also threatened that he “may blow up Iran,” if a deal is not reached soon.

The global oil market has become increasingly familiar with Trump’s maximalist rhetoric, where aggressive warnings routinely trigger sharp knee-jerk spikes in Brent’s price even as participants weigh the actual likelihood of an all-out war.

Downward pressure:

Brent crude’s price has moved lower after the US Energy Information Administration (EIA) reported a build in US crude stocks.

Commercial US crude oil inventories increased by around 922,000 bbls to 427.3 million bbls in the week ending 25 September, according to data from the EIA.

Market analysts expected an inventory draw of 455,000 b/d instead, two analysts from ING Bank noted.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

Yesterday, the American Petroleum Institute (API) reported a 1.02 million-bbl rise in US crude stocks during the same week.

“Bearish sentiment was reinforced by the latest EIA data, which showed US commercial crude inventories rising by 922k barrels [922,000 bbls] last week,” ING Bank’s analysts added.

By Tuhin Roy and Aparupa Mazumder

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