Americas Market Update 4 Sep

Fuel prices have mostly moved in the downwards direction, and strong bunker demand has been reported in Houston.

IMAGE: Aerial view of the Port of Houston, Texas. Getty Images

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

• VLSFO prices down in Balboa ($37/mt), New York ($15/mt), Zona Comun ($11/mt), Houston and Los Angeles ($9/mt)
• LSMGO prices up in Los Angeles ($27/mt), and down in Zona Comun ($46/mt), New York ($34/mt), Houston ($27/mt) and Balboa ($19/mt)
• HSFO prices down in Los Angeles ($25/mt), Balboa ($13/mt), New York ($11/mt) and Houston ($3/mt)

Houston's VLSFO price has declined after a lower-priced 150–500 mt stem, fixed at $701/mt, has weighed on the benchmark.

The port's HSFO price has declined by one-third as much as its VLSFO price, narrowing the port's Hi5 spread to $207/mt from $213/mt on Thursday.

In Houston, bunker demand has been strong over the past week, and prompt availability is bit tight across all three conventional grades. HSFO and VLSFO require lead times of 5–7 days. LSMGO can be delivered by most suppliers within 4–5 days in Houston, a trader said.

Los Angeles' LSMGO price has been the outlier over the past day, increasing despite Brent's downward movement and against the broader market direction.

The port's LSMGO price benchmark currently stands at premiums of $277/mt to Houston and $139/mt to New York.

Suppliers can deliver VLSFO and LSMGO within a week in Los Angeles and HSFO lead times are at 7 days, a source said.

Brent

The front-month ICE Brent contract has lost by $1.75/bbl on the day, trading at $94.47/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent crude’s price is poised to end the week higher than it began, amid escalating hostilities between the US and Iran in the Middle East.

Renewed drone strikes have driven commercial fleets to detour around the Strait of Hormuz, increasing voyage times.

Earlier this week, multiple unmanned aerial vehicles (UAVs) struck two commercial vessels attempting to transit the region – one belonging to Saudi Arabia’s national shipping company Bahri, and another sailing under a South Korean flag.

Riyadh’s Ministry of Foreign Affairs has accused Tehran of the attack on oil tanker Sidr, which killed two sailors.

“Oil prices remain elevated, with ICE Brent holding above $95/bbl, amid a pickup in hostilities between the US and Iran this week,” two analysts from ING Bank noted.

Downward pressure:

Crude oil exports from Iraq have increased to about 2.34 million b/d in August, from 1.35 million bp/d in July, Reuters reported, citing two Iraqi energy officials. The news has put some downward pressure on Brent.

Brent crude’s price rally “may lose traction if Hormuz shipments keep moving smoothly,” ING Bank’s analysts said.

Any uptick in the number of vessels transiting the Strait of Hormuz is expected to slash oil prices, according to market analysts.

“If Strait of Hormuz flows continue uninterrupted despite the latest escalation, the upward pressure on prices may begin to fade,” ING Bank’s analysts said.

By Gautamee Hazarika and Aparupa Mazumder

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