Europe & Africa Market Update 16 Jan

Bunker prices across European and African ports have moved in mixed directions, and supplies off Skaw and in Gothenburg require longer lead times.

IMAGE: Aerial view of Port of Gothenburg. Gothenburg Port Authority

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($6/mt) and Rotterdam ($1/mt), and down in Gibraltar ($5/mt)
• LSMGO prices up in Gibraltar ($11/mt) and Rotterdam ($2/mt)
• HSFO prices up in Durban ($5/mt), Gibraltar ($2/mt) and Rotterdam ($1/mt)
• B30-VLSFO down in Rotterdam ($5/mt) and Gibraltar ($3/mt)

The LSMGO price at Denmark’s Skaw offshore has jumped $13/mt over the past session. This may have been influenced by a higher-priced 500-1500 mt stem, fixed at $678/mt.

The LSMGO price in Sweden’s Gothenburg has also seen a significant $10/mt gain in the past day.

Consequently, LSMGO bunkers in both the Scandinavian locations cost between $40-$43/mt more than in Rotterdam, compared to $29-$35/mt premiums observed in the previous day.

Bunker availability is tight off Skaw and in Gothenburg, and buyers are advised to book stems with at least 10 days of lead time to get competitive offers and avoid higher premiums, a trader told ENGINE.

Both the locations are experiencing rough south-easterly winds of more than 30 knots, which may disrupt bunkering operations.

Brent

The front-month ICE Brent contract has declined by $0.43/bbl on the day, to trade at $64.08/bbl at 09.00 GMT.

Upward pressure:

Brent’s price this week has been driven primarily by heightened geopolitical risks and concerns over crude oil supply disruptions, market analysts said.

Kazakh oil shipments from the Caspian Pipeline Consortium (CPC) terminal are expected to come under “significant pressure” this month, according to two analysts from ING Bank.

Exports are expected to come in between 800,000 b/d – 900,000 b/d, or around 45% below initial expectations, Bloomberg reports.

“The drop is due to maintenance and damage caused by Ukrainian drones, while weather has also been an issue,” ING Bank’s analysts said.

Downward pressure:

Brent crude has faced downward pressure on easing fears of an imminent US intervention in Iran’s ongoing unrest.

Yesterday, US President Donald Trump told reporters that “killing in Iran is stopping”, adding that the US administration would be very upset if the Islamic Republic continued its crackdown on protestors.

“This reduced the likelihood of US intervention and possible disruptions to Iranian oil production and nearby shipping lanes,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Any escalation with Tehran will further raise concerns about potential disruptions to oil flows through the Strait of Hormuz, according to market analysts.

“The sell-off came as the US avoided taking immediate action against Iran amid ongoing protests in the country,” ING Bank’s analysts said.

By Nachiket Tekawade and Aparupa Mazumder

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