East of Suez Market Update 16 Oct

Bunker fuel prices in East of Suez ports have moved higher, and VLSFO availability remains tight in Singapore.

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

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

• VLSFO prices up in Zhoushan ($33/mt), Singapore ($16/mt) and Fujairah ($10/mt)
• LSMGO prices up in Singapore ($37/mt), Fujairah ($35/mt) and Zhoushan ($26/mt)
• HSFO prices up in Zhoushan ($18/mt), Fujairah ($14/mt) and Singapore ($10/mt)

Zhoushan’s VLSFO price has moved $33/mt higher over the previous session, marking the highest gains for the grade among the three major bunker hubs. The port’s VLSFO price now stands at a premium of $23/mt over Singapore, and at a $39/mt discount to Fujairah.

The price of VLSFO at Zhoushan has gained more than it's HSFO, widening the port’s Hi5 spread from $54/mt yesterday, to $69/mt today.

Bunker supply in Zhoushan remains tight, with several suppliers reporting low stocks. Recommended lead times for VLSFO, LSMGO and HSFO stand at around 11 days, according to a source.

Among the three major Asian bunkering hubs, Singapore’s LSMGO price recorded the largest increase, gaining by $37/mt over the past day.

Nonetheless, lead times for VLSFO at the port stands at 11-18 days. HSFO requires about 11-17 days, according to a source, while LSMGO remains more readily available, with lead times of around 6-9 days. Singapore’s bunker market remains tight despite average demand.

Brent

The front-month ICE Brent contract has gained by $1.14/bbl on the day, to trade at $105.24/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has felt some upward pressure after the US Energy Information Administration (EIA) reported a sharp draw in US commercial crude oil stocks.

Commercial US crude oil inventories decreased by around 8.6 million bbls to 415.6 million bbls in the week ending 9 October, according to data from the EIA.

The EIA data marks “the largest weekly decline since February,” two analysts from ING Bank said. A draw in US crude stocks typically indicates stronger demand for oil and can support Brent’s price.

Uncertainty in the Middle East and concerns over oil flows through the Strait of Hormuz have led the global oil market to price in a “significant risk premium”, according to ING Bank’s analysts.

The analysts added that some kind of agreement between the US and Iran would be needed for that premium to be fully removed.

Downward pressure:

Brent’s gains have been capped after members of the International Energy Agency (IEA) agreed to accelerate the release of oil from emergency stockpiles.

IEA members have collectively released about 330 million bbls of crude oil and petroleum products from strategic reserves so far.

The release accounts for the bulk of the 400 million-bbl stock draw pledged by the 32-member countries earlier this year.

By Aparupa Mazumder

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