East of Suez Market Update 2 Feb

Prices in East of Suez ports have plunged across all fuel grades, and VLSFO availability is tight in Zhoushan.

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

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

• VLSFO prices down in Zhoushan ($35/mt), Fujairah ($34/mt) and Singapore ($30/mt)
• LSMGO prices down in Fujairah ($68/mt), Zhoushan ($52/mt) and Singapore ($42/mt)
• HSFO prices down in Zhoushan ($38/mt), Singapore ($28/mt) and Fujairah ($24/mt)
• B30-VLSFO at a $235/mt premium over VLSFO in Singapore
• B30-VLSFO at a $269/mt premium over VLSFO in Fujairah

Bunker fuel prices in major Asian ports have tracked Brent’s downward movement, with Zhoushan’s VLSFO price recording the steepest drop. Despite the decline, Zhoushan’s VLSFO price continues to trade at a premium of $13/mt over Singapore and $29/mt over Fujairah.

VLSFO and HSFO supply in Zhoushan remains tight. Prompt LSMGO availability has improved in the major Chinese port, with lead times lowering from 5-7 days last week, to around 3-5 days now.

Meanwhile, Singapore’s HSFO price has decreased, driven by a lower-priced 500–1,500 mt stem fixed in the port. HSFO lead times are at around 9-12 days in Singapore.

Brent

The front-month ICE Brent contract has plunged by $4.24/bbl on the day from Friday, to trade at $65.84/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent has retained some ground after official drilling figures showed steadiness in US oil rigs. The total number of oil rigs remained unchanged over the week at 411, according to Baker Hughes.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening, or expected to happen, in the shale sector.

In a tight market, any signal of reduced future supply can put upward pressure on Brent’s price.

Downward pressure:

Brent crude’s price has plunged by nearly $5/bbl at the start of this week, following reports that negotiations between Washington and Tehran have progressed.

US President Donald Trump said Iran is “seriously talking” with Washington, Reuters reported.

“The distinct shift in his [Trump’s] messaging has eased concerns of supply disruptions,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

The news has eased geopolitical tensions with the OPEC member that could cut supply from the market, analysts said.

“The selloff follows reports of fresh US-Iran negotiations, raising the possibility of a deal and easing geopolitical risk premium,” two analysts from ING Bank said.

By Aparupa Mazumder

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