East of Suez Market Update 28 Sep

Most prices in East of Suez ports have risen since Friday, and availability of all grades is tight in Zhoushan.

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 from Friday:

• VLSFO prices up in Zhoushan ($17/mt), Fujairah ($15/mt) and Singapore ($7/mt)
• LSMGO prices up in Fujairah ($10/mt), and down in Zhoushan ($13/mt) and Singapore ($11/mt)
• HSFO prices up in Zhoushan ($31/mt), Singapore ($18/mt), and down in Fujairah ($11/mt)
  
• B30-VLSFO price down in Singapore ($30/mt)

Zhoushan's HSFO price has climbed by $31/mt over the weekend, the steepest increase among the three major Asian bunker ports. It now stands at a $109/mt premium over Singapore and a $151/mt premium over Fujairah. Zhoushan's HSFO price has been rising steadily through this month, with its daily average reaching its highest level since March.

Zhoushan's VLSFO price has also posted the largest gain of the three ports, rising $17/mt over the weekend. That leaves it at an $87/mt premium over Singapore but at a $19/mt discount to Fujairah. LSMGO has gone the other way, falling $13/mt, but it still trades at a $171/mt premium over Singapore and a $236/mt discount to Fujairah.

Bunker availability is tight in Zhoushan, where several suppliers are running short of stocks and delayed replenishment cargoes are restricting supply. Lead times for VLSFO and HSFO have lengthened to around 14 days, from 10 days and seven days, respectively. LSMGO lead times have also stretched from seven days to 10 days.

Bunkering activity is expected to be subdued at several Chinese ports during the National Day Golden Week holiday from 1-7 October, according to a China-based source. Deliveries against existing orders will proceed as normal over the holiday, but today is the last day at most ports to place stem orders for delivery during the holiday period.

In Taiwan, VLSFO and LSMGO can be delivered with lead times of two days in Keelung and Hualien, and 2-3 days in Taichung and Kaohsiung.

Brent

The front-month ICE Brent contract has gained by $3.35/bbl on the day from Friday, to trade at $108.04/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has moved close to $110/bbl as peace negotiations between Washington and Tehran remain deadlocked.

US President Donald Trump has dismissed the seven-day peace deal proposed by Tehran on the sidelines of the United Nations General Assembly (UNGA) in New York last week.

The proposal, which has since been rejected, would have reopened the Strait of Hormuz to commercial navigation in exchange for Washington releasing all frozen Iranian assets.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US increased by three over the week to 455 units last week.

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.

By Tuhin Roy and Aparupa Mazumder

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