Europe & Africa Market Update 26 Jan

Bunker benchmarks in European and African ports have moved in mixed directions, and weather-related bunkering disruptions persist at Mediterranean ports.

IMAGE: Two ships moored at a liquid bulk terminal in the Port of Huelva. Port of Huelva

Changes on the day from Friday, to 09.00 GMT today:

• VLSFO prices up in Rotterdam ($14/mt), and down in Gibraltar ($4/mt) and Durban ($3/mt)
• HSFO prices up in Rotterdam ($12/mt), and down in Durban ($14/mt) and Gibraltar ($1/mt)
• LSMGO prices up in Rotterdam ($10/mt) and Gibraltar ($2/mt)

Bunker prices for all conventional fuels have recorded significant gains in Rotterdam over the weekend.

The Dutch port’s VLSFO is currently at a $21/mt discount to Gibraltar, down from $39/mt on Friday, while its HSFO price is $18/mt lower than Gibraltar’s, compared with a $31/mt discount on Friday.

Rotterdam's LSMGO discount to Gibraltar has also narrowed by $8/mt, to $48/mt now.

As of this morning, Gibraltar has 23 vessels awaiting bunkers due to a suspension to inbound traffic at the port, according to port agent MH Bland.

Rough weather in the Mediterranean continues to disrupt bunkering operations at multiple ports, and delays in deliveries are expected across the region.

Bunker operations at the ports of Ceuta and Huelva are also suspended, according to MH Bland.

In Algeciras, operations at the OPL have not resumed since the weekend. However, the suspension at the port’s inner anchorage has been lifted, though deliveries are subject to availability of space, the port agent added. The Spanish port is forecast to experience wind gusts of up to 25 knots, the port agent noted.

Most operations at the port of Las Palmas have also been suspended, except for those at the inner anchorage or at the berth, MH Bland noted.

Brent

The front-month ICE Brent contract has risen by $1.47/bbl on the day from Friday, to trade at $66.12/bbl at 09.00 GMT.

Upward pressure:

Oil prices have found fresh support as harsh winter weather has disrupted production across key US crude-producing regions. Around 250,000 b/d of output has been knocked offline due to severe cold, with declines reported in the Bakken field in Oklahoma and parts of Texas, Reuters reported citing JPMorgan analysts.

“Colder weather will also boost demand prospects for heating fuels, as reflected in the strength in heating oil cracks,” analysts from ING Bank said.

Beyond weather-related factors, market participants remain alert to geopolitical risks, as tensions between the US and Iran continue to unsettle sentiment.

“Further support for the oil market will be driven by lingering geopolitical risks. The US is sending ships to the Middle East, raising concerns about an escalation with Iran,” ING Bank’s analysts commented.

Downward pressure:

The total number of rigs drilling for crude oil and natural gas in the US rose by one to 544 units last week, Baker Hughes reported.

The US oil rig count is widely viewed as an indicator of future oil production, as it signals the level of current and expected drilling activity in the shale sector.

In an already oversupplied market, any indication of higher future output can weigh on Brent prices.

By Samantha Shaji and Tuhin Roy

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