East of Suez Market Update 3 June

Prices in East of Suez ports have moved up, and VLSFO and HSFO availability is tight in Singapore.

IMAGE: Aerial view of Singapore container terminal. Getty Images

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

• VLSFO prices up in Fujairah ($66/mt), Zhoushan ($40/mt) and Singapore ($34/mt)
• LSMGO prices up in Singapore ($119/mt), Fujairah ($84/mt) and Zhoushan ($77/mt)
• HSFO prices up in Zhoushan ($45/mt), Fujairah ($31/mt) and Singapore ($17/mt)
• B30-VLSFO price up in Singapore ($79/mt)

Singapore’s LSMGO price has surged by $119/mt over the past day, marking the sharpest increase among the three major Asian bunker hubs. Despite the sharp rise, the grade continues to trade at discounts of $450/mt to Fujairah and $32/mt to Zhoushan.

LSMGO availability in Singapore has improved, with recommended lead times easing to around seven days from 10-12 days last week. VLSFO supply, however, remains relatively tight, with suppliers advising lead times of 10-15 days, compared with 13-18 days a week ago.

HSFO availability has tightened further, with recommended lead times extending to approximately 10-15 days from 9-11 days previously.

Meanwhile, a biofuel supplier has indicated that it is not yet ready to offer or deliver biofuels in Singapore. The supplier plans to begin onboarding customers once logistical arrangements have been finalised and it is closer to commencing supply operations, according to a source.

Brent

The front-month ICE Brent contract has increased by $5.22/bbl on the day, to trade at $98.48/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent's price has risen as renewed hostilities in the Middle East and a lack of progress in talks between Tehran and Washington continue to support the market

Iran launched ballistic missiles towards neighbours Kuwait and Bahrain, while US forces carried out strikes on Iran's Qeshm Island, Reuters reported.

“US, Iran exchange missile and drone strikes in Persian Gulf,” remarked VANDA Insights founder Vandana Hari.

Market sentiment is also buoyed by concerns that diplomatic efforts between the two countries are faltering.

“Crude oil edged higher as peace talks between the US and Iran struggled to stay on track,” ANZ Bank senior commodity strategist Daniel Hynes noted.

Meanwhile, US crude oil inventories fell by a larger-than-anticipated 6.8 million bbls in the week ending 29 May, according to estimates from the American Petroleum Institute (API) cited by Trading Economics.

The decline was significantly steeper than analysts’ expectations for a 3.6 million-bbl draw. Lower US crude inventories can signal stronger demand and may provide additional upward support to Brent futures.

Downward pressure:

Despite the lack of any meaningful breakthrough in US-Iran talks, market participants continue to closely monitor the negotiations for signs of progress, a factor that has exerted some downward pressure on Brent's price.

By Tuhin Roy

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