East of Suez Market Update 14 May

Bunker fuel prices in East of Suez ports have largely followed Brent’s downward trend, and availability across all grades is tight in Fujairah.

IMAGE: Bunker barge at berth in Fujairah, UAE. Port of Fujairah

Changes on the day to 17.00 SGT (09.00 GMT) today:

• VLSFO prices down in Fujairah ($21/mt), Zhoushan ($19/mt) and Singapore ($11/mt)
• LSMGO prices up in Singapore ($1/mt), and down in Zhoushan ($33/mt), Fujairah ($12/mt)
• HSFO prices up in Zhoushan ($17/mt), and down in Singapore ($13/mt), Fujairah ($12/mt)
• B30-VLSFO price down in Singapore ($21/mt)

Fujairah’s VLSFO price has recorded the steepest decline among the three major Asian bunker hubs, after a lower-priced 500-1500 mt stem was fixed at the port.

Despite the decline, Fujairah’s VLSFO is currently trading at premiums of $94/mt and $51/mt over Zhoushan and Singapore, respectively.

Prompt bunker availability in Fujairah across all grades is very tight currently, with supply across all grades subject to enquiry, a source said. Bunker demand has substantially dropped in Fujairah as many vessels continue to wait until transit through the Strait of Hormuz clears.

In China’s Zhoushan port, the price of VLSFO has declined over the previous session, while the port's HSFO price recorded a notable rise – narrowing the port’s Hi5 spread from $101/mt to $65/mt.

At $65/mt, Zhoushan’s Hi5 spread remains fairly below Fujairah’s $185/mt and Singapore’s $149/mt.

Lead times for all grades in Zhoushan is currently around 4-7 days, down from last week's 5-7 days. Bunker availability across northern China remains mixed, with lead times ranging between 4-7 days for all grades.

Brent

The front-month ICE Brent contract has declined by $1.08/bbl on the day, to trade at $106.24/bbl, at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price has found some support after the US Energy Information Administration (EIA) reported a decline in US crude stocks.

Commercial US crude oil inventories decreased by 4.3 million bbls to 452.9 million bbls in the week ending 8 May, according to data from the EIA.

“In the US, EIA weekly data continued to show a tightening in the domestic oil market,” two analysts from ING Bank said. “The draw is driven by continued strength in crude oil exports,” they said.

The American Petroleum Institute (API) reported a 2.2 million bbl-decline the previous day.

A decline in US crude stocks typically indicates improvement in demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Brent’s price has moved lower ahead of US President Donald Trump’s meeting with Chinese counterpart Xi Jinping this week.

“The oil market is eagerly awaiting the outcome of the meeting between President Trump and President Xi, and whether it could yield some positive results on the Iran war,” ING Bank’s analysts said.

The meeting – during Trump’s state visit to Tiananmen Square in Beijing – is expected to include high-level discussions on the rapidly evolving Middle East situation, while also laying the groundwork for deeper long-term cooperation between the two sides.

Some market participants hope China can pressure Iran into reaching an agreement with the US that will potentially end the conflict and allow energy flows through the Strait of Hormuz to resume.

“The market could be pinning too much hope on the US-China talks yielding some positive results on Iran,” ING Bank’s analysts added.

By Aparupa Mazumder

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