East of Suez Market Update 7 May

Bunker fuel prices across all grades in East of Suez ports have moved in mixed directions, and availability across all grades is tight in Fujairah.

IMAGE: Aerial view of Zhoushan City, Zhejiang Province. Getty Images

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

• VLSFO prices up in Fujairah ($25/mt), Zhoushan ($21/mt) and Singapore ($10/mt)
• LSMGO prices up in Fujairah ($2/mt), and down in Zhoushan ($181/mt), Singapore ($40/mt)
• HSFO prices up in Fujairah ($22/mt) and Singapore ($14/mt), and down in Zhoushan ($8/mt)
• B30-VLSFO price down in Singapore ($10/mt)

Fujairah’s VLSFO price has increased the most among the major Asian bunker hubs in the previous session, positioning its VLSO price at premiums of $90/mt and $84/mt over Zhoushan and Singapore.

Prompt bunker availability in Fujairah across all grades continues to be very tight amid the ongoing Middle East war.

Saudi Arabia’s Jeddah port is also facing some constraints in bunker supply, especially for VLSFO. However, LSMGO availability has improved this week.

Zhoushan’s VLSFO benchmark has gained in the previous session, while HSFO has declined – widening the Hi5 spread from 108/mt to 137/mt.

At $137/mt, Zhoushan’s Hi5 spread remains below Fujairah’s $207/mt, but higher than Singapore’s $123/mt.

Brent

The front-month ICE Brent contract has declined by $4.11/bbl on the day, to trade at $99.18/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent futures gained some support after the US Energy Information Administration (EIA) reported a decline in US crude stocks.

Commercial US crude oil inventories decreased by 2.3 million bbls to 457.2 million bbls in the week ending 1 May, according to data from the EIA.

“The modest draw [reported by the EIA] reflected a sharp fall in exports,” two analysts from ING Bank noted.

Yesterday, the American Petroleum Institute (API) also reported a sizeable decline of 8.1 million bbls in US crude stocks.

A decline in US crude stocks typically indicates improvement in demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Brent crude’s price has plunged on renewed hopes of a ceasefire deal between Washington and Tehran.

Iran is considering a new US proposal to end the conflict in the Middle East, the BBC reported.

“Energy markets sold off sharply… on de-escalation hopes in the Middle East,” ING Bank’s analysts said.

The news has raised hopes that oil flows through the Strait of Hormuz can gradually resume, according to market analysts.

The US proposal is “understood to include a one-page memorandum that would, if accepted by Iran, lead to a gradual reopening of Hormuz and the lifting of US restrictions on access to Iranian ports,” ING Bank’s analysts added.

By Aparupa Mazumder

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