East of Suez Market Update 27 Nov

Most prices in East of Suez ports have moved up, and availability of all grades is good across several South Korean 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 up in Singapore, Fujairah and Zhoushan ($5/mt)
• LSMGO prices up in Zhoushan ($12/mt), Singapore ($9/mt) and Fujairah ($7/mt)
• HSFO prices up in Zhoushan ($5/mt) and Singapore ($2/mt), and down in Fujairah ($1/mt)
• B30-VLSFO at a $260/mt premium over VLSFO in Singapore
• B30-VLSFO at a $284/mt premium over VLSFO in Fujairah

VLSFO prices across the three main Asian bunker hubs have risen by $5/mt in the past day. Zhoushan now carries significant premiums of $33/mt over Fujairah and $29/mt over Singapore.

Demand in Zhoushan remains weak, and suppliers are shifting delivery guidance to early December for all grades, compared with last week’s 4–6-day lead times.

South Korea’s bunker demand is still slow, and suppliers are offering prompt lead times of about two days for all grades, tighter than last week’s 4–7-day window.

In Sri Lanka, one supplier is quoting around five days for all grades at both Colombo and Hambantota, up from last week’s 1–2 days. Colombo may also face bunkering interruptions from 27–28 November due to weather.

Brent

The front-month ICE Brent contract has gained by $0.67/bbl on the day, to trade at $63.15/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has rebounded, reversing earlier losses, as traders priced in the likelihood of a final US Federal Reserve (Fed) rate cut in December.

The expectations come following recent remarks from US policymakers, analysts said. Earlier this week, Fed Governor Christopher Waller said that the US labour market has softened to justify a final 25 bp cut at the central bank’s upcoming meeting next month.

Oil prices moved higher as “expectations grow for a December interest rate cut by the US Federal Reserve,” two analysts from ING Bank noted.

Lower interest rates in the US can boost demand, making dollar-denominated commodities like oil cheaper for holders of other currencies.

Downward pressure:

The US Energy Information Administration (EIA) reported a surge in crude stocks – capping some of Brent’s price gains today.

Commercial US crude oil inventories have increased by 2.8 million bbls to 427 million bbls for the week ending 21 November, according to data from the EIA.

“The market also noted a rise in US oil inventories,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

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

The EIA’s weekly inventory report was “relatively bearish,” ING Bank’s analysts added.

By Tuhin Roy and Aparupa Mazumder

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