Americas Market Update 8 Oct

Fuel prices have moved in the upwards direction, and bunker delays related to bad weather are expected in New Orleans.

IMAGE: Cargo containers being offloaded in the Port of Los Angeles. Getty Images

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

• VLSFO prices up in Los Angeles ($28/mt), Zona Comun ($24/mt), Houston ($16/mt), Balboa ($12/mt) and New York ($7/mt)
• LSMGO prices up in Houston ($76/mt), Balboa ($62/mt), Zona Comun ($61/mt), Los Angeles ($36/mt) and New York ($17/mt)
• HSFO prices up in Balboa ($37/mt), Los Angeles ($26/mt), Houston ($14/mt) and New York ($13/mt)

Fuel prices have increased across all major ports in the Americas, following Brent’s upward movement.

The port of Los Angeles has recorded the highest increase in VLSFO prices over the past day. The grade is currently at premiums of $328/mt to Houston and $274/mt to New York.

Bunkering operations at the West Coast ports of Los Angeles and Long Beach have been ongoing, with no weather disruptions expected at the ports, a trader said.

Demand at the port has been strong this week. Suppliers have recommended lead times of 3-7 days for HSFO and LSMGO, while VLSFO has been available with lead times of 5-7 days, a source said.

New Orleans could see delays from 9 October due to high wind gusts associated with the tropical system, with disruptions possible through 10 October, a source said.

Brent

The front-month ICE Brent contract has gained $2.67/bbl on the day, trading at $104.46/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent crude’s price has moved higher, following more air assaults on commercial vessels navigating the Persian Gulf region.

An oil tanker was struck by multiple unknown projectiles within the Strait of Hormuz yesterday, the United Kingdom Maritime Trade Operations (UKMTO) agency reported.

The maritime agency has reported at least nine attacks in the key waterway so far this month, ANZ Bank’s senior commodity strategist Daniel Hynes said, adding that such attacks have resulted in a reduction in shipments from the Persian Gulf in the past.

The latest attack, that happened about 51 nautical miles north of Madinat ash Shamal, Qatar, have resulted in casualties, the UKMTO said.

“This time around, producers appear to be willing to take the risk of their vessels being damaged, as there is no alternative way to get their oil to international markets,” Hynes added.

The US Energy Information Administration (EIA) has reported a decline in crude inventories, putting further upward pressure on Brent’s price today.

Commercial US crude oil inventories decreased by around 3.2 million bbls to 424.1 million bbls in the week ending 2 October, according to data from the EIA.

A drop in US crude stocks can indicate higher demand for oil and put some upward pressure on Brent's price.

Downward pressure:

Brent’s price has felt some downward pressure after market reports showed some improvement in oil exports out of the Middle East.

Kuwait is reportedly producing at 75% of pre-war levels, while Saudi Arabia has reduced the official selling price (OSP) of the Arab Light to Asia for November loadings, in a sign of improving supply conditions.

There is also news that Iraq is hiring additional vessels to send oil through the strait.

Crude oil prices remain in a tug-of-war between increasing strikes on vessels in the Strait of Hormuz against increased flows, as the situation evolves, Hynes said.

By Gautamee Hazarika and Aparupa Mazumder

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