Europe & Africa Market Update 27 Nov

Benchmark fuel prices in European and African ports have moved in mixed directions, while demand remains weak off Malta.

IMAGE: Tankers during a bunker operation off Malta. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Gibraltar and Rotterdam ($6/mt), and down in Durban ($3/mt)
• LSMGO prices down in Rotterdam ($4/mt) and Gibraltar ($3/mt)
• HSFO prices up in Durban ($11/mt), Rotterdam ($6/mt) and Gibraltar ($5/mt)
• Rotterdam B30-VLSFO premium over VLSFO up by $1/mt to $271/mt
• Gibraltar B30-VLSFO premium over VLSFO up by $5/mt to $364/mt

The prices of HSFO and VLSFO at Rotterdam and Gibraltar have shown gains over the past day, while LSMGO prices have dipped lower at both ports.

Conversely, LSMGO's price off Malta has increased $12/mt in the last session, with a higher-priced 50-150 mt stem fixed at $722/mt probably providing some support to the benchmark.

This has narrowed the offshore area’s price discount to Gibraltar by around $15/mt in a single day, and Malta’s LSMGO is now priced just $4/mt below Gibraltar’s.

Bunker demand remains soft off Malta, with traders reporting very few enquiries. Availability is normal and deliveries of all fuel types are possible with a notice of 1-3 days, a trader told ENGINE.

Southerly winds of around 25 knots and waves above 1.5 metres are forecast to blow in the area until Friday.

Supplies are continuing normally in Bunkering Area 1, which is more sheltered from the rough winds, the trader said.

Brent

The front-month ICE Brent contract has gained by $0.67/bbl on the day, to trade at $63.15/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has rebounded, reversing earlier losses, as traders priced in the likelihood of a final US Federal Reserve (Fed) rate cut in December.

The expectations come following recent remarks from US policymakers, analysts said. Earlier this week, Fed Governor Christopher Waller said that the US labour market has softened to justify a final 25 bp cut at the central bank’s upcoming meeting next month.

Oil prices moved higher as “expectations grow for a December interest rate cut by the US Federal Reserve,” two analysts from ING Bank noted.

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

Downward pressure:

The US Energy Information Administration (EIA) reported a surge in crude stocks – capping some of Brent’s price gains today.

Commercial US crude oil inventories have increased by 2.8 million bbls to 427 million bbls for the week ending 21 November, according to data from the EIA.

“The market also noted a rise in US oil inventories,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

A build in US crude stocks typically indicates lower demand for oil and can put downward pressure on Brent futures.

The EIA’s weekly inventory report was “relatively bearish,” ING Bank’s analysts added.

By Nachiket Tekawade and Aparupa Mazumder

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