East of Suez Market Update 21 May

Prices in East of Suez ports have moved down, and availability across all grades is good in several Sri Lanka ports.

IMAGE: Container ship at Colombo port, Sri Lanka. Getty Images

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

• VLSFO prices down in Zhoushan ($30/mt), Singapore ($27/mt) and Fujairah ($25/mt)
• LSMGO prices down in Fujairah ($51/mt), Zhoushan ($50/mt) and Singapore ($35/mt)
• HSFO prices down in Singapore ($81/mt), Zhoushan ($36/mt) and Fujairah ($13/mt)
• B30-VLSFO price down in Singapore ($48/mt)

VLSFO prices across the three major Asian bunker hubs have fallen for a second straight day. In Singapore, HSFO prices declined more sharply than the port’s VLSFO benchmark, widening the Hi5 spread by $54/mt to $208/mt. The spread remains significantly above Zhoushan’s $125/mt, though still below Fujairah’s $217/mt.

VLSFO availability in Singapore continues to remain tight, although recommended delivery lead times have eased slightly to 10-14 days from 12-14 days last week. HSFO supply, meanwhile, has improved, with lead times narrowing to 5-10 days compared with 9-14 days previously.

In India, VLSFO supply remains constrained in Kandla and Sikka, where lead times are currently estimated at around 8-9 days, according to a source. The grade requires approximately 5-6 days in Cochin, while shorter lead times of 2-3 days are available in Hazira.

LSMGO supply prospects in Mundra, however, are being offered only on a firm enquiry basis.

By contrast, bunker availability in Sri Lanka remains robust. Both Colombo and Hambantota are well stocked across all fuel grades, with at least one supplier capable of offering prompt deliveries, within around three days.

Brent

The front-month ICE Brent contract has declined by $3.76/bbl on the day, to trade at $104.98/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has felt upward pressure after the US Energy Information Administration (EIA) reported its weekly US oil inventory report.

US crude oil inventories declined by 7.9 million bbls to 445 million bbls in the week ending 15 May, according to data from the EIA.

“This [EIA inventory report] highlights tightening in the US market on the back of stronger oil exports, amid ongoing supply disruptions in the Middle East,” two analysts from ING Bank noted.

A decline in US crude stocks could indicate improved demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Brent crude’s price continues to remain highly reactive to Iran-related developments, with market participants putting significant weight on reports suggesting progress in US-Iran negotiations.

“Oil prices sold off heavily… with hopes growing once again for a potential US-Iran agreement,” ING Bank’s analysts said.

Washington is in the “final stages” of the ongoing negotiations with Tehran, Reuters reported citing US President Donald Trump as saying.

Trump’s remarks have put significant downward pressure on Brent’s price, market analysts said.

“As a result, ICE Brent settled more than 5.6% lower yesterday,” ING Bank’s analysts claimed.

By Tuhin Roy and Aparupa Mazumder

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