Europe & Africa Market Update 21 May

Prices across European and African ports have fallen in the last day, while longer lead times are recommended in West African locations.

IMAGE: Cargo ship docked in the port of Walvis Bay, Namibia. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($74/mt), Gibraltar ($36/mt) and Gibraltar ($20/mt)
• LSMGO prices down in Durban ($172/mt), Gibraltar ($50/mt) and Rotterdam ($34/mt)
• HSFO prices down in Gibraltar ($31/mt) and Rotterdam ($24/mt)
• B30-VLSFO prices down in Gibraltar ($38/mt) and Rotterdam ($29/mt)

Bunker benchmarks in the three major ports have mostly slumped in the last day, tracking the sharp fall in Brent.

The price of VLSFO at Durban has fallen more sharply than at Rotterdam and Gibraltar. The grade, at Durban, is now offered at a $238/mt premium compared with Namibia’s offshore anchorage, Walvis Bay.

The VLSFO price off Walvis Bay has seen a much steeper fall than Togo’s Lome. Consequently, Walvis Bay’s discount to Lome has widened by around $37/mt over the past day.

VLSFO and LSMGO bunker availability off Walvis Bay and in Lome is tight amid strong demand, with buyers are advised to book deliveries around 10 days ahead, a trader told ENGINE.

Swells around 2 metres high are forecast off Walvis Bay next week between 26-31 May, which could disrupt some bunkering operations in the area.

Increased wave periods of more than 15 seconds are forecast in Lome between 24-27 May, which could make bunkering challenging in that location.

Brent

The front-month ICE Brent contract has declined by $3.76/bbl on the day, to trade at $104.98/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has felt upward pressure after the US Energy Information Administration (EIA) reported its weekly US oil inventory report.

US crude oil inventories declined by 7.9 million bbls to 445 million bbls in the week ending 15 May, according to data from the EIA.

“This [EIA inventory report] highlights tightening in the US market on the back of stronger oil exports, amid ongoing supply disruptions in the Middle East,” two analysts from ING Bank noted.

A decline in US crude stocks could indicate improved demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Brent crude’s price continues to remain highly reactive to Iran-related developments, with market participants putting significant weight on reports suggesting progress in US-Iran negotiations.

“Oil prices sold off heavily… with hopes growing once again for a potential US-Iran agreement,” ING Bank’s analysts said.

Washington is in the “final stages” of the ongoing negotiations with Tehran, Reuters reported citing US President Donald Trump as saying.

Trump’s remarks have put significant downward pressure on Brent’s price, market analysts said.

“As a result, ICE Brent settled more than 5.6% lower yesterday,” ING Bank’s analysts claimed.

By Nachiket Tekawade and Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online