Americas Market Update 7 July

Bunker prices have mostly moved up with Brent, especially Houston’s LSMGO benchmark which has been pushed higher amid a pickup in trading activity.

IMAGE: A cruise liner approaching the first of the Panama Canal locks, Gatun Lock, early in the morning. Getty Images

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

• VLSFO prices up in Houston ($27/mt), New York ($8/mt) and Los Angeles ($1/mt), and down in Zona Comun ($21/mt) and Balboa ($4/mt)
• LSMGO prices up in Houston ($56/mt), Balboa ($16/mt), New York ($14/mt) and Los Angeles ($9/mt)
• HSFO prices up in Houston ($10/mt), New York ($6/mt) and Los Angeles ($4/mt), and down in Balboa ($8/mt)

Houston’s LSMGO price has shot up after stems and offers have come in at significantly higher levels through the day yesterday, than earlier in the day and on Friday.

There has been a widespread in firm offers, with $938/mt at the lower end for a 50-150 mt volume, and $1,103/mt at the higher for a 0-50 mt volume. A 150-500 mt stem was fixed for $964/mt with delivery in 3-7 days.

Houston remains among the cheapest options for LSMGO in the Americas, with discounts of $108/mt to Balboa and $93/mt to New York. Paranagua is more competitive at a slim $2/mt premium over Houston, after a 50-150 mt stem was fixed for $958/mt with delivery more than seven days out.

The max draft for vessels transiting the Panama Canal’s Neopanamax Locks will be lowered to 14.94 metres from 24 July and 14.78 metres from 15 August, the Panama Canal Authority has informed. Gatun Lake water levels are projected to come down because of the El Nino phenomenon over the coming months, and the authority said it takes action to ensure safe and reliable passage.

The reduction will mainly affect vessels that load close to the max draft limit, chiefly dry bulk carriers, laden tankers and LPG carriers, and potentially fully laden Neopanamax container ships. Any vessel exceeding the new limits would need to lighten its load or partly discharge to comply.

Brent

Front-month ICE Brent contract has continued to push higher, adding $0.86/bbl on the day to trade at $72.78/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent’s price has moved higher after commercial ships transiting the Strait of Hormuz came under attack once again.

An LNG carrier, Al Rekayyat, was hit by an unknown projectile on the port side that caused a fire earlier today, the United Kingdom Maritime Trade Operations (UKMTO) reported. The vessel was laden with LNG when it came under attack.

Moreover, Iran's Islamic Revolutionary Guard Corp (IRGC) launched at least two missiles at commercial ships transiting through the Strait of Hormuz via the Omani corridor yesterday.

The initial rebound in vessel transits through the region after the US-Iran temporary peace accord “has stalled”, according to ANZ Bank’s senior commodity strategist Daniel Hynes. He said vessel crossings remain “in single digits and no sustained recovery [is] evident”.

Downward pressure:

Brent has been under some downward pressure from a Baker Hughes showing a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US increased by five over the week, to 445 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 Erik Hoffmann and Aparupa Mazumder

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