East of Suez Market Update 18 Dec

Bunker prices in East of Suez ports have moved in mixed directions, and bunker demand is low in Zhoushan.

IMAGE: Aerial view of Zhoushan, Zhejiang, China. Getty Images

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

• VLSFO prices up in Zhoushan ($4/mt) and Singapore ($1/mt), and down in Fujairah ($3/mt)
• LSMGO prices up in Zhoushan ($14/mt), Fujairah ($2/mt), and down in Singapore ($1/mt)
• HSFO prices up in Zhoushan ($13/mt) and Singapore ($3/mt), and down in Fujairah ($3/mt)
• B30-VLSFO at a $269/mt premium over VLSFO in Singapore
• B30-VLSFO at a $289/mt premium over VLSFO in Fujairah

Out of the three major Asian bunker hubs, Zhoushan’s LSMGO price has gained the highest in the past session – bringing the port’s LSMGO price to a $45/mt premium over Singapore.

Zhoushan’s bunker demand continues to remain weak, with suppliers still recommend 4–7 days for all grades, unchanged from last week.

Bunker supply dynamics differ across northern Chinese ports. Dalian and Qingdao can cover VLSFO and LSMGO requirements, although HSFO is scarce in Qingdao. Tianjin continues to face shortages across all grades, while Shanghai has constrained VLSFO and HSFO supply, with LSMGO remaining adequately supplied.

At Hong Kong, lead times for all fuel grades are at roughly seven days. Supply conditions are tight for HSFO and LSMGO and particularly constrained for VLSFO.

Brent

The front-month ICE Brent contract has lost by $0.27/bbl on the day, to trade at $60.03/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) released its latest crude stocks report.

Commercial US crude oil inventories have decreased by 1.3 million bbls to 424.4 million bbls for the week ending 12 December, according to data from the EIA.

The draw was primarily driven by “stronger exports over the week, with crude oil exports increasing 655k b/d WoW [655,000 b/d week-on-week] to 4.66m b/d [4.66 million b/d],” remarked two analysts from ING Bank.

A drop in US crude stocks usually signals stronger demand and can offer some support to Brent’s price.

Downward pressure:

Oil market participants are closely monitoring developments in Ukraine peace talks, which could bring an end to the four-year conflict with Russia.

According to media reports, Ukrainian President Volodymyr Zelensky said earlier this week that the US-mediated peace talks were in progress.

Market analysts believe that a deal could potentially ease energy-related sanctions on Moscow, returning additional barrels to a global market already facing concerns of a supply glut.

“While Russian seaborne oil exports have held up well since the imposition of sanctions on Rosneft and Lukoil, this oil is still struggling to find buyers,” ING Bank’s analysts said.

“The result is a growing volume of Russian oil at sea,” they further added.  

By Aparupa Mazumder

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