Europe & Africa Market Update 25 Nov

Benchmark bunker prices in key European and African ports have shown mixed movements, and prompt supply remains tight in the Gibraltar Strait.

IMAGE: View from the Rock of Gibraltar, UK to Algeciras, Spain. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($8/mt), and down in Rotterdam ($5/mt) and Gibraltar ($1/mt)
• LSMGO prices down in Gibraltar ($5/mt) and Rotterdam ($4/mt)
• HSFO prices up in Durban ($4/mt), and down in Rotterdam ($4/mt) and Gibraltar ($3/mt)
• Gibraltar B30-VLSFO premium over VLSFO up by $1/mt to $346/mt

VLSFO and HSFO prices have moved up in Durban and have decreased in Rotterdam and Gibraltar, while LSMGO prices in both Rotterdam and Gibraltar have seen modest declines over the past session.

Algeciras’ LSMGO price has dropped $22/mt more than Gibraltar’s benchmark, putting it at a $57/mt discount to Gibraltar. A lower-priced 50-150 mt stem fixed at $730/mt in the past day has contributed to dragging Algeciras’ LSMGO price down.

The port's HSFO price has also declined in the past day, weighed down by a lower-priced 150-500 mt stem fixed in Algeciras at $397/mt. Meanwhile, two higher-priced VLSFO offers between $428-$437/mt have led to a $6/mt gain in the fuel grade’s price. The diverging price movements have widened the port’s Hi5 spread by $17/mt in a single day to $32/mt.

Prompt bunker supply remains tight in Gibraltar, Algeciras and Ceuta, with buyers advised to book around 7-10 days ahead for HSFO deliveries, while VLSFO and LSMGO may need around 5-8 days of notice, a trader told ENGINE.

There are six vessels awaiting bunkers in Gibraltar today, down from 14 vessels yesterday, but most suppliers are still running around 12-24 hours behind schedule, port agent MH Bland said. Some suppliers in Algeciras are also around a day behind schedule, MH Bland added.

Brent

The front-month ICE Brent contract has gained by $0.63/bbl on the day, to trade at $62.83/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has moved higher following comments from US Federal Reserve (Fed) policymakers on the prospects of a final rate cut before the year ends.

Fed Governor Christopher Waller said the US labour market has softened to justify a final 25-basis-point cut at the central bank’s meeting next month, Reuters reported.

“[Market] expectations of a Fed rate cut were boosted by dovish comments from central bankers,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Lower interest rates in the US can boost demand, making dollar-denominated commodities like oil cheaper for holders of other currencies.

"Waller fuelled optimism of a rate cut in December, saying concerns about the labour market warrant advocating for a cut at the next meeting," Hynes said.

The US Fed is scheduled to hold its Federal Open Market Committee (FOMC) meeting on 10 December.

Downward pressure:

Brent’s price has come under some downward pressure as market analysts continue to assess the potential impact of a Russia–Ukraine ceasefire – which is now in its third year.

Washington has modified its proposed 28-point plan to achieve a ceasefire deal between Kyiv and Moscow, after European leaders viewed the proposal as leaning in favour of Moscow.

The US administration has claimed that progress has been made in the ceasefire plan that could potentially end the conflict.

According to oil market analysts, these developments could pave the way for easing sanctions on Russian crude, adding more barrels to an already oversupplied market.

Oil prices declined “on the prospect of more supply hitting the market amid easing geopolitical tensions,” Hynes added.

By Nachiket Tekawade and Aparupa Mazumder

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