Americas Market Update 3 Nov

Fuel prices have mostly moved in the downwards direction, and high wind gusts are expected to cause delays at the Bahamas' Freeport anchorage.

IMAGE: Cranes and shipping containers at a port in Argentina. Getty Images

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

• VLSFO prices up in Zona Comun ($2/mt), and down in Los Angeles ($43/mt), New York ($28/mt), Houston ($18/mt) and Balboa ($13/mt)
• LSMGO prices down in Zona Comun ($309/mt), New York ($45/mt), Los Angeles ($44/mt), Balboa ($20/mt) and Houston ($14/mt)
• HSFO prices down in Los Angeles ($31/mt), Balboa ($23/mt), New York ($14/mt) and Houston ($7/mt)

Zona Comun’s VLSFO price has increased over the past day making it an outlier against Brent’s decline and the wider market’s downward direction. A higher-priced, 500-1,500 mt stem, booked at $986/mt, may have offered an upward push to the benchmark.

Bunker availability is tight at the anchorage, with VLSFO and LSMGO both needing lead times of more than a week and up to 10 days, a source said.

High winds are likely to delay anchorage deliveries in Freeport, Bahamas, until early Wednesday, a source said.

Balboa’s VLSFO price has fallen less than its HSFO price, widening the Hi5 spread to $118/mt today, from $108/mt on Monday.

VLSFO and LSMGO availability is tight at both, Balboa and Cristobal, with recommended lead times of more than seven days. HSFO availability has been very tight, with deliveries typically requiring lead times of 8-10 days, a trader said.

Brent

The front-month ICE Brent contract has lost $3.64/bbl on the day, trading at $104.96/bbl at 07.00 CST (13.00 GMT) today.

Upward pressure:

Brent has received support from escalating geopolitical tensions, following reports of a US strike on Iran's Qeshm Island. Citing a US official, Reuters reported that Washington carried out the strike on Monday.

Meanwhile, prospects for a diplomatic resolution remain uncertain. A senior Iranian official told Reuters that Tehran and Washington were still far from reaching an agreement to end the war, adding that Iran would not accept Washington's excessive demands.

The lack of progress in negotiations and continued uncertainty over the reopening of the Strait of Hormuz have further supported oil prices.

“The oil market is also wary of stop-and-go diplomatic efforts that haven’t delivered peace, with the two adversaries yet to agree on terms for fully reopening the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said. 

Supply-side concerns have also contributed to the upward pressure. An oil refinery in Russia's Yaroslavl city was damaged in a Ukrainian drone attack, local governor Mikhail Evrayev said on Tuesday. Russia's Defence Ministry separately reported that it had intercepted 856 Ukrainian drones over the country's regions overnight, Reuters reported.

Downward pressure:

However, market hopes of progress in diplomatic efforts to end the US-Israeli war with Iran have weighed on Brent prices, with the prospect of a resolution raising expectations of a gradual stabilisation in Middle Eastern crude supplies.

Talks between Iranian and Qatari officials have fuelled optimism about a possible end to the conflict and the restoration of regional supply stability, Reuters reported.

“Crude oil slumped as the US and Iran explored a diplomatic solution to the eight-month conflict,” Hynes said. 

The possibility of further price declines remains closely tied to developments in peace negotiations. “What is clear, though, is that strong signals of progress in peace talks would mean more downside for prices,” two analysts from ING Bank noted.

By Gautamee Hazarika and Tuhin Roy

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