Americas Market Update 18 May

Fuel prices have moved in mixed directions, and bunker demand has been strong at the West Coast port of Los Angeles.

IMAGE: Container ship enters the Panama Canal at dawn.Getty Images.

Changes on the day from Friday to 08.00 CDT (13.00 GMT) today:

• VLSFO prices up in Zona Comun ($34/mt) and Houston ($11/mt), and down in Balboa ($32/mt), Los Angeles ($10/mt) and New York ($9/mt)
• LSMGO prices up in Los Angeles ($16/mt), and down in Zona Comun ($55/mt), Balboa ($31/mt), New York ($25/mt) and Houston ($16/mt)
• HSFO prices up in Houston ($7/mt), and down in Balboa ($21/mt), Los Angeles ($3/mt) and New York ($1/mt)

Los Angeles' LSMGO price benchmark has increased the most among the grade and is currently at wide premiums of $264/mt to Houston and $156/mt to New York.

Bunker demand is good at the ports of Los Angeles and Long Beach, and prompt availability is tight across all fuel grades, a trader said. Lead times for HSFO and VLSFO are currently around 8–10 days, while LSMGO can be secured within 5–7 days.

Further south in Panama, the port of Balboa has recorded price declines across all three conventional fuel grades.

The port's VLSFO price benchmark has decreased more than its HSFO price benchmark, narrowing the Hi5 spread to $88/mt today from $99/mt on Friday.

In Balboa and Cristobal, HSFO and VLSFO have typically required 4–7 days of notice over the past week. LSMGO can be delivered within 3–6 days, a source said.

Brent

The front-month ICE Brent contract has lost $0.67/bbl on the day from Friday, to trade at $107.54/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent crude has opened the week on a firmer footing as instability in the Middle East continue to underpin oil prices.

Regional oil producers, including Saudi Arabia and the UAE, reported new drone strikes over the weekend, intensifying the ongoing US-Israel standoff with Iran.

The UAE’s Ministry of Foreign Affairs has condemned the attack which targeted an electricity generator in the Barakah Nuclear Power Plant in Al Dhafra region.

The strike was “carried out by a drone that entered the country’s territory from the western border direction,” the UAE’s foreign affairs ministry said in a statement.

“If anything, re-escalation risks are increasing, with a drone strike on the UAE’s only nuclear power plant over the weekend,” two analysts from ING Bank noted.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US rose by five to 415 units last week.

The US oil rig count is seen as an indicator of future oil production. It reflects how much oil drilling activity is happening or expected to happen in the shale sector.

By Gautamee Hazarika and Aparupa Mazumder

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