East of Suez Market Update 16 Sep

Prices across conventional grades in East of Suez ports have moved higher, while bunkering at Zhoushan’s outer anchorages has fully resumed following a 22-day suspension caused by typhoon-related adverse weather.

IMAGE: Night scene of Zhoushan, close to the dock on Putuo island. Getty Images

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

• VLSFO prices up in Zhoushan ($69/mt), Fujairah ($26/mt) and Singapore ($3/mt)
• LSMGO prices up in Zhoushan ($22/mt), Singapore ($4/mt), and unchanged in Fujairah
• HSFO prices up in Fujairah, Zhoushan ($22/mt) and Singapore ($8/mt)
• B30-VLSFO down in Singapore ($8/mt)

Zhoushan's VLSFO price has climbed by $69/mt, the steepest increase among the three major Asian bunker ports. The benchmark now stands at a $90/mt discount to Fujairah and a $27/mt premium to Singapore.

The port’s HSFO price has risen modestly by $22/mt in the past day. Consequently, Zhoushan's Hi5 spread has widened from $125/mt to $172/mt, moving above Singapore's $135/mt but remaining below Fujairah's $243/mt.

Fuel availability in Zhoushan remains tight despite subdued demand, with suppliers quoting around 10 days for VLSFO, LSMGO and HSFO deliveries. VLSFO lead times are largely unchanged from the previous week, as repeated weather disruptions continue to weigh on supply.

However, bunkering operations at Zhoushan's Tiaozhoumen and Xiazhimen outer anchorages have resumed today after a 22-day suspension caused by adverse weather associated with a typhoon system, according to a source. All bunkering anchorages in Zhoushan are now fully operational.

Hong Kong's bunker market is broadly unchanged, with suppliers maintaining lead times of around seven days across the major grades.

Brent

The front-month ICE Brent contract has inched $0.01/bbl lower on the day, to trade at $107.90/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has continued to trade close to $110/bbl as Middle East supply concerns rattle the global oil market.

Washington has claimed that Tehran is willing to resort to diplomacy, while Iranian officials have dismissed such theories.

Moreover, oil prices have surged after the Iran-backed Houthis hit the 1,200 km East-West Pipeline, disrupting Riyadh’s critical export route, which funnels about 70% of its crude exports through the Red Sea terminal at Yanbu to circumvent the Strait of Hormuz.

The attack “has significantly curtailed the OPEC producer’s ability to export oil,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

The pipeline shutdown could last for weeks and crude oil at Yanbu may deplete before the pipeline operations fully restore, market analysts said.

“The Houthi group also seized a strategic port and island directly on the Bab al-Mandeb Strait at the south end of the Red Sea,” Hynes added.

Downward pressure:

Brent’s price has felt some downward pressure after the American Petroleum Institute (API) reported a huge rise in US crude stocks.

US crude oil inventories increased by 7.14 million bbls in the week ending 11 September, the API reported.

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

By Tuhin Roy and Aparupa Mazumder

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