East of Suez Market Update 20 Jan

Most prices in East of Suez ports have moved up, and availability of all grades is good in Hong Kong.

IMAGE: Cargo ships in Victoria Harbour of Hong Kong, China. Getty Images

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

• VLSFO prices up in Zhoushan ($10/mt) and Singapore ($3/mt), and unchanged in Fujairah
• LSMGO prices up in Singapore, Fujairah ($3/mt) and Zhoushan ($1/mt)
• HSFO prices up in Singapore ($6/mt), Fujairah ($2/mt) and Zhoushan ($1/mt)
• B30-VLSFO prices up in Singapore ($14/mt) and Fujairah ($3/mt)

Zhoushan's VLSFO price is trading at notable premiums of $29/mt over Fujairah and $22/mt over Singapore, due to the considerable price increase it recorded over the past session.

In contrast, the port’s HSFO price has held steady, widening the Hi5 spread by $9/mt to $81/mt. This level is higher than Singapore’s spread of $68/mt, but lower than Fujairah’s $87/mt.

Despite subdued demand, VLSFO availability in Zhoushan has tightened as several suppliers are running low on stocks, resulting in extended lead times of 7–10 days, up from 5–7 days last week. By comparison, lead times for both LSMGO and HSFO in Zhoushan remain unchanged at 5–7 days.

In Hong Kong, bunker lead times continue to hold steady at around seven days for all grades, broadly in line with recent weeks.

Brent

The front-month ICE Brent contract has gained by $0.10/bbl on the day, to trade at $63.68/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has inched higher as a weaker US dollar provided some support to the broader commodities complex, according to two analysts from ING Bank.

“Commodities performed relatively well… as a weaker USD proved supportive,” ING Bank’s analysts said.

The gains come as trade tensions between the US and Europe intensify, after President Donald Trump called for the “complete and total purchase” of Greenland.

Besides, the sustained strength in ICE Brent time spreads will lend further support to prices, as it points to tightening conditions in the spot physical market, the two analysts added.

Downward pressure:

The total number of rigs drilling for crude oil in the US rose by one to 410 units last week, according to Baker Hughes.

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.

In an oversupplied market, any signal of increased future supply can put downward pressure on Brent’s price.

By Tuhin Roy and Aparupa Mazumder

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