Americas Market Update 25 Nov

Fuel prices have largely declined across key hubs in the Americas, and VLSFO demand in Houston has weakened.

IMAGE: Cargo port with shipping containers along the entrance to the Panama Canal. Getty Images

Changes on the day to 07.00 CST (13.00 GMT) today:

• VLSFO prices up in New York ($1/mt), and down in Los Angeles ($9/mt), Balboa ($5/mt), Zona Comun ($4/mt) and Houston ($2/mt)
• LSMGO prices up in New York ($4/mt), and down in Balboa ($30/mt), Houston ($25/mt), Los Angeles ($6/mt) and Zona Comun ($3/mt)
• HSFO prices up in New York ($1/mt), unchanged in Los Angeles, and down in Houston ($3/mt) and Balboa ($2/mt)

New York's prices have gained across all three grades, while levels in other ports have mostly tracked Brent’s downward movement in the past day.

In the East Coast port, demand for VLSFO and HSFO has been strong this week, and availability has remained good, with both grades requiring 5–6 days of lead time for delivery.

However, VLSFO availability in New York is expected to tighten as we move into the early days of December, a bunker trader has informed ENGINE.

Meanwhile, VLSFO demand in Houston has weakened, and its price has fallen by $2/mt. Houston is currently at a $37/mt discount to New York, narrowing from $42/mt a month ago.

The weather has been rough at the port, with the National Weather Service reporting a strong line of widely scattered showers and thunderstorms for the Houston Ship Channel and Galveston Bay from this afternoon and into the evening.

"Potential for elevated seas and strong, damaging wind gusts is possible. Bunkering ops can get delayed,” a ship agent said.

Meanwhile, Balboa’s LSMGO price benchmark has declined the most in the past day, shedding $30/mt. The port’s VLSFO price has dipped more than its HSFO price, slightly narrowing the Hi5 spread to $63/mt today, from $66/mt yesterday.

In Panama, demand is decent, and all three grades can be delivered with 4–5 days of lead time.

Brent

The front-month ICE Brent contract has dipped $0.49/bbl lower on the day, to trade at $62.21/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure:

Brent crude’s price has moved higher following comments from US Federal Reserve (Fed) policymakers on the prospects of a final rate cut before the year ends.

Fed Governor Christopher Waller said the US labour market has softened to justify a final 25-basis-point cut at the central bank’s meeting next month, Reuters reported.

“[Market] expectations of a Fed rate cut were boosted by dovish comments from central bankers,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

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

"Waller fuelled optimism of a rate cut in December, saying concerns about the labour market warrant advocating for a cut at the next meeting," Hynes said.

The US Fed is scheduled to hold its Federal Open Market Committee (FOMC) meeting on 10 December.

Downward pressure:

Brent’s price has come under some downward pressure as market analysts continue to assess the potential impact of a Russia–Ukraine ceasefire – which is now in its third year.

Washington has modified its proposed 28-point plan to achieve a ceasefire deal between Kyiv and Moscow, after European leaders viewed the proposal as leaning in favour of Moscow.

The US administration has claimed that progress has been made in the ceasefire plan that could potentially end the conflict.

According to oil market analysts, these developments could pave the way for easing sanctions on Russian crude, adding more barrels to an already oversupplied market.

Oil prices declined “on the prospect of more supply hitting the market amid easing geopolitical tensions,” Hynes added.

By Gautamee Hazarika and Aparupa Mazumder

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