Europe & Africa Market Update 23 Feb

Most bunker fuel prices across European and African ports have dipped, and prompt deliveries are tight at the Gibraltar Strait ports.

IMAGE: Aerial view of the Bay of Gibraltar. Getty Images

Changes on the day from Friday to 09.00 GMT today:

• VLSFO prices down in Durban ($17/mt), Rotterdam ($9/mt) and Gibraltar ($4/mt)
• LSMGO prices up in Rotterdam ($3/mt), and down in Gibraltar ($5/mt)
• HSFO prices down in Durban ($11/mt), Rotterdam ($7/mt) and Gibraltar ($4/mt)
• B30-VLSFO prices down in Gibraltar ($30/mt) and Rotterdam ($6/mt)

Most conventional fuel prices have declined over the weekend, tracking the fall in Brent’s price.

Algeciras’ VLSFO price has decreased by $17/mt, a much steeper fall than at neighbouring Gibraltar. A 150-500 mt VLSFO stem, fixed at a low price of $462/mt, has put additional downward pressure on the benchmark.

The LSMGO benchmark for Algeciras has seen a $46/mt decline over the weekend, around nine times more than in Gibraltar. A 150-500 mt stem, fixed at $707/mt, has weighed on the price at the Spanish port.

Consequently, LSMGO in Algeciras is trading at a $49/mt discount to Gibraltar, compared to Friday's $8/mt discount.

Getting LSMGO bunkers at Gibraltar, Algeciras and Ceuta can require around 5-7 days, while VLSFO and HSFO supplies need around 8-10 days of notice, a trader said.

There are around five vessels awaiting bunkers at Gibraltar as of Monday morning, while some suppliers are running behind schedule by a day, port agent MH Bland said.

At Algeciras, suppliers can be delayed anywhere from 1-3 days, the port agent added.

Brent

The front-month ICE Brent contract has declined by $0.36/bbl on the day from Friday, to trade at $71.08/bbl at 09.00 GMT.

Upward pressure:

Brent has found some support after official data from Baker Hughes showed that the US oil rig count was unchanged at 409 in the week ending 20 February.

The rig tally is widely regarded as a forward-looking gauge of US crude output, offering insight into current and anticipated drilling activity in the shale patch.

In a market where supply remains constrained, indications of softer future production can lend upward support to Brent futures.

Downward pressure:

Brent crude’s price has moved lower as market participants focused on renewed possibilities of a negotiation between Washington and Tehran.

The US and Iran are preparing for another round of discussion about the latter’s nuclear enrichment capabilities, Reuters reported. Representatives from both nations will sit for a third round of nuclear talks on Thursday in Geneva, the report added.

“Oil prices are under pressure… with further US-Iran talks scheduled,” according to two analysts from ING Bank.

The news has eased some fears of supply disruption in the oil-rich region, according to market analysts.  

“[Oil] prices are trading softer… with further talks between the US and Iran planned for Thursday, while Iran’s foreign minister said that there is a chance for a diplomatic solution,” ING Bank’s analysts added.

By Nachiket Tekawade and Aparupa Mazumder

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