Americas Market Update 22 July

Fuel prices have mostly trended upward, and the Panama Canal is set to temporarily reduce vessel bookings due to drought conditions.

IMAGE: Large container ship passes through the Panama Canal. Getty Images

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

• VLSFO prices up in Balboa ($28/mt), Los Angeles ($20/mt), Zona Comun, New York ($19/mt) and Houston ($5/mt)
• LSMGO prices up in New York ($40/mt), Los Angeles ($32/mt), Zona Comun ($18/mt) and Houston ($2/mt), and down in Balboa ($19/mt)
• HSFO prices up in Houston ($17/mt), New York ($12/mt) and Los Angeles ($3/mt), and down in Balboa ($21/mt)

Although Balboa's VLSFO price recorded the highest increase among the key ports for the grade, the port's HSFO and LSMGO prices have recorded significant declines.

Balboa's LSMGO price has declined after a lower-priced 150-500 mt stem, fixed at $1,285/mt, put downward pressure on the benchmark.

The port's HSFO price has also declined after a lower-priced 500-1,500 mt HSFO stem, fixed at $640/mt, weighed the benchmark down.

Due to the port's VLSFO and HSFO prices moving in opposite directions, the port's Hi5 spread has almost doubled to $97/mt today, up from $48/mt on Tuesday.

Recommended lead times at the port are 3-5 days for VLSFO and LSMGO, while HSFO requires around 7 days, a source said.

Water levels at the Panama Canal, primarily due to El Niño, have been a recent concern.

Shipping agent Norton Lilly said on Wednesday that the Panama Canal Authority will temporarily reduce vessel booking slots because of drought conditions, adding to congestion along the key trade route.

Brent

The front-month ICE Brent contract has gained by $3.12/bbl on the day, to trade at $94.17/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent crude’s price has gained by more than $5/bbl, as hopes of a temporary US-Iran ceasefire have faded after US President Donald Trump ruled out any chances of immediate talks.

The US Central Command (CENTCOM) has conducted the 11th consecutive day of strikes against Iran, targeting Tehran’s maritime capabilities, aircraft hangars, drone storage facilities and logistics infrastructure, it said.

“Oil prices pushed higher again yesterday amid mounting supply risks as hopes fade for a temporary ceasefire between the US and Iran,” two analysts from ING Bank noted.

Additionally, Yemen’s Iran-backed Houthi militants imposed a maritime embargo on vessels carrying Saudi Arabian crude through the Bab al-Mandeb Strait into the Red Sea.

Three Saudi oil tankers reversed course in the Red Sea following the Houthi announcement, Reuters reported.

“The Houthis' announced maritime blockade on Saudi Arabia has shippers nervous, with several tankers moving to avoid the Bab el-Mandeb Strait,” ING Bank’s analysts added.

Downward pressure:

Brent’s price felt some downward pressure following an unexpected increase in US crude stocks.

US crude oil inventories increased by 2.6 million bbls in the week ending 17 July, according to estimates from the American Petroleum Institute (API).

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

By Gautamee Hazarika and Aparupa Mazumder

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