East of Suez Market Update 11 Dec

Prices in East of Suez ports have moved down, and availability of all grades is good in Hong Kong.

IMAGE: Container ship and working crane bridge with Hong Kong skyline in the background. Getty Images

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

• VLSFO prices down in Zhoushan ($16/mt), Singapore and Fujairah ($3/mt)
• LSMGO prices down in Singapore ($4/mt), Fujairah and Zhoushan ($2/mt)
• HSFO prices down in Fujairah ($6/mt), Zhoushan ($4/mt) and Singapore ($1/mt)
• B30-VLSFO at a $263/mt premium over VLSFO in Singapore
• B30-VLSFO at a $286/mt premium over VLSFO in Fujairah

Zhoushan’s VLSFO price has dropped by $16/mt, the sharpest decline among the three major Asian bunker hubs. This has narrowed Zhoushan’s VLSFO premiums over Fujairah and Singapore, bringing them down to $12/mt and $7/mt, respectively.

Bunker demand in Zhoushan remains weak, and suppliers continue to recommend 4–7 days of lead time for all grades, the same as last week.

In Hong Kong, lead times are steady at around seven days across all grades.

Despite “slow” demand in Singapore, VLSFO lead times remain unpredictable at 4–12 days, little changed from last week’s 4–11 days. HSFO now requires 7–10 days of advance notice, up from 3–9 days previously. LSMGO remains readily available, with suppliers advising 5–8 days of lead time, slightly longer than 3–7 days last week.

Brent

The front-month ICE Brent contract has lost $0.44/bbl on the day, to trade at $61.44/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has felt some upward pressure following news that the US Department of Homeland Security and the US Coast Guard have seized an oil tanker off the coast of Venezuela.

The oil tanker had been used to carry sanctioned oil on behalf of Venezuela and Iran, the US government has argued, marking a major escalation in geopolitical tensions.

China, the world’s second-largest crude oil consumer, “has been the biggest buyer of Venezuela’s crude in recent years,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Additionally, the US Energy Information Administration’s (EIA) latest oil inventory report showed a decline in crude stocks, supporting Brent’s price.

Commercial US crude oil inventories decreased by 1.8 million bbls to 426 million bbls for the week ending 5 December, according to data from the EIA.

The decline was unexpected, Hynes said, noting that it was “the first draw on stocks in about three weeks.”

Downward pressure:

Brent crude’s price has shrugged off bullish market fundamentals and traded lower this week, largely on expectations of a ceasefire between Russia and Ukraine.

Leaders from the UK, France and Germany held a telephone call with US President Donald Trump to discuss Washington's continued efforts to end the war in Ukraine, Reuters reported.

The meeting was a "critical moment" in the process of securing a ceasefire that could potentially end the four-year long conflict, Reuters reported. 

Oil analysts say a peace deal between Russia and Ukraine could prompt an easing of global sanctions on Russian energy, potentially bringing sanctioned oil volumes back to the global market.

“With Ukraine peace uncertainty overshadowing all other factors, crude has become largely rangebound,” VANDA Insights’ founder Vandana Hari said.

By Tuhin Roy and Aparupa Mazumder

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