Europe & Africa Market Update 25 June

Bunker prices across major European and African ports have declined, while prompt fuel availability remains tight at ARA ports and the Gibraltar Strait ports.

IMAGE: The Europoort area in the Port of Rotterdam. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Rotterdam ($8/mt), and down in Gibraltar ($31/mt) and Durban ($4/mt)
• LSMGO prices up in Rotterdam ($28/mt), and down in Durban ($27/mt) and Gibraltar ($22/mt)
• HSFO prices down in Gibraltar ($19/mt) and Rotterdam ($9/mt)
• B30-VLSFO prices down in Gibraltar ($35/mt) and Rotterdam ($20/mt)

Regional bunker benchmarks have mostly declined over the past day, tracking the fall in Brent.

Conversely, Rotterdam’s LSMGO price has surged higher. Multiple higher-priced 50-150 mt stems, fixed at prices between $855-890/mt, have provided support to the benchmark.

Meanwhile, Gibraltar’s LSMGO price has fallen significantly over the last day. This has narrowed Gibraltar’s LSMGO price premium over Rotterdam by $50/mt in a single day.

The Mediterranean port's VLSFO price has also dropped with the broader market.

On the contrary, a higher-priced 150-500 mt VLSFO stem, fixed at $595/mt in Rotterdam, has provided upward support to the Dutch port's benchmark.

Consequently, Gibraltar’s VLSFO price has flipped to a $6/mt discount to Rotterdam, compared to a $33/mt premium observed yesterday.

Fuel availability remains tight for prompt supplies at the Gibraltar Strait ports, with buyers advised to inquire about stems around 10 days ahead to get good coverage from suppliers, a trader said.

As for the ARA ports, prompt bunker availability is very, with buyers advised a notice of around seven days for HSFO and VLSFO supplies, and five days for LSMGO, the trader added.

Brent

The front-month ICE Brent contract has declined by $3.33/bbl on the day, to trade at $72.37/bbl at 09.00 GMT.

Upward pressure:

Brent price has felt some upward pressure after US Energy Information Administration (EIA) reported a big draw in US crude stocks.

Commercial US crude oil inventories decreased by 6.1 million bbls to 412.1 million bbls in the week ending 19 June, according to data from the EIA.

The American Petroleum Institute (API) reported a comparatively smaller decline of 765,000 bbls in crude stocks during the same week.

A fall in US crude stockpiles is generally seen as a sign of stronger oil demand and can provide upward support to Brent’s price.

“[Inventory] levels are so low at Cushing, the main storage hub in the US, that traders are concerned that some companies will be forced to take tanks out of service due to risks of collapse,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.

Downward pressure:

Brent crude’s price has continued to slide lower as the ongoing US and Iran negotiations pointed to further easing of tensions in the Middle East. 

Signs of progress in the talks, the resumption of tanker movement across the Gulf and a two-month US sanctions waiver, have collectively erased the conflict-driven price surge seen earlier in March.

“Brent has dropped roughly 8% over the past week as the market begins to price a far quicker reopening of Middle East supply than anyone would have dared expect at the height of the Hormuz shock,” according to SPI Asset Management managing partner Stephen Innes.

On Wednesday, two supertankers and one LNG tanker exited the Strait of Hormuz, heading for India and China, Reuters reported, citing data from ‌LSEG and Kpler.

“The increased movement of ships through the Strait of Hormuz is also providing some hope that the worst of the supply disruptions are behind us,” Hynes said.

By Nachiket Tekawade and Aparupa Mazumder

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