Europe & Africa Market Update 4 June

Bunker prices across European and African ports have fallen, and fuel availability is normal in Istanbul.

IMAGE: Aerial view of container port and ship in Istanbul. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Rotterdam ($42/mt), Durban ($35/mt) and Gibraltar ($22/mt)
• LSMGO prices up in Durban ($338/mt), and down in Gibraltar ($35/mt) and Rotterdam ($15/mt)
• HSFO prices down in Gibraltar ($21/mt) and Rotterdam ($17/mt)
• B30-VLSFO down in Rotterdam ($33/mt) and Gibraltar ($24/mt)

Durban's LSMGO price has recorded significant gains over the past session, despite Brent and other regional bunker prices recording losses. The price increase was influenced by a higher-priced 150-500 mt LSMGO stem, fixed at the port at $2,334/mt.

Conversely, the price of LSMGO at the port of Istanbul declined over the same period.

The Turkish port's VLSFO price has dropped by $79/mt, more sharply than Gibraltar’s VLSFO price decline. This has narrowed Istanbul’s price premium by around $57/mt in a single day.

The VLSFO price decline is also much steeper than Istanbul's HSFO price decline, narrowing the port’s Hi5 spread to $52/mt today, from $98/mt yesterday. This significantly decreases the economic benefit for scrubber-fitted ships to bunker HSFO in the port.

Fuel availability is stable in the port. Buyers can readily get deliveries of HSFO, VLSFO, LSMGO and ULSFO fuel grades with a notice of around 1-3 days, a local supplier said.

Brent

The front-month ICE Brent contract has declined by $1.90/bbl on the day, to trade at $96.58/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has felt some upward pressure after the US Energy Information Administration (EIA) reported a sizeable decline in US crude stocks.

Commercial US crude oil inventories decreased by about 8 million bbls to 434 million bbls in the week ending 29 May, according to data from the EIA.

“While inventories do fall seasonally as refiners ramp up operating rates, the pace of decline has been faster than usual,” two analysts from ING Bank noted.

The American Petroleum Institute (API) also reported a larger-than-expected draw of 6.8 million bbls a day earlier.

A decline in US crude stocks could indicate higher demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Hope of a lasting truce between Israel and Lebanon, following the US-brokered ceasefire agreement, has put downward pressure on Brent’s price today.

Under the agreement, both sides will immediately cease all hostilities. This could help achieve a broader deal with Iran, ultimately reopening the Strait of Hormuz, market analysts said.

“News that Israel and Lebanon agreed on a ceasefire could potentially open the door for talks to advance,” ING Bank’s analysts said.

By Nachiket Tekawade and Aparupa Mazumder

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