East of Suez Market Update 18 Aug

Prices in East of Suez ports have moved higher, and availability of all grades has improved in Singapore.

IMAGE: Aerial view of Singapore container terminal. Getty Images

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

• VLSFO prices up in Singapore ($32/mt), Zhoushan ($25/mt), and Fujairah ($8/mt)
• LSMGO prices up in Fujairah ($30/mt), Singapore ($24/mt) and Zhoushan ($14/mt)
• HSFO prices up in Singapore ($49/mt), Fujairah ($10/mt) and Zhoushan ($8/mt)

Singapore’s VLSFO price has climbed by $32/mt over the past day, marking the sharpest increase among the three major Asian bunker ports. The rise has pushed Singapore’s VLSFO from a discount to a slight $6/mt premium over Fujairah, while its previous discount to Zhoushan has been fully eroded.

Meanwhile, VLSFO availability in Singapore has improved. Suppliers are now recommending lead times of 7–13 days, compared with 12–21 days last week. HSFO supply has also eased, with lead times narrowing to 6–13 days from 12–21 days a week earlier. LSMGO availability has improved the most, with recommended lead times falling to 2–8 days from 4–12 days last week.

In Malaysia’s Port Klang, however, bunker supply remains constrained. Prompt VLSFO availability is tight, LSMGO supply remains limited, and HSFO continues to face supply pressure.

Brent

The front-month ICE Brent contract has gained by $1.71/bbl on the day, to trade at $90.92/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has moved higher, following the expiration of the 60-day US-Iran peace accord signed on 17 June.

“Talks appear to be at a standstill, as the 60-day truce expired on Monday,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Washington has decided to not extend the ceasefire, while Tehran is prepared to launch a “full offensive” policy against the US, as negotiations failed to reach a positive outcome.

“Oil prices remained supported by rising geopolitical risks and supply concerns,” two analysts from ING Bank noted.

Downward pressure:

While there are no major downward pressures acting on Brent’s price today, market analysts will keep an eye out for US crude stocks data that will be out later this week.

Last week, the US Energy Information Administration (EIA) reported a massive 17.4 million bbls build in commercial US crude oil inventories, in the week ending 7 August.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

By Tuhin Roy and Aparupa Mazumder

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