East of Suez Market Update 5 Feb

Prices in East of Suez ports have moved up, and availability of all grades is good across several Indonesian ports.

IMAGE: Tanjung Priok Port, Jakarta, Indonesia, photographed from a commercial plane. Getty Images

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

• VLSFO prices up in Zhoushan ($13/mt), Singapore ($10/mt) and Fujairah ($8/mt)
• LSMGO prices up in Fujairah ($15/mt), Zhoushan ($13/mt) and Singapore ($11/mt)
• HSFO prices up in Singapore, Fujairah and Zhoushan ($11/mt)
• B30-VLSFO prices up in Fujairah ($25/mt) and Singapore ($22/mt)

VLSFO prices across East of Suez ports have increased by a modest $8–13/mt over the past day. Singapore’s VLSFO is currently trading at a premium of $20/mt over Fujairah, while sitting at a slight discount of $8/mt to Zhoushan.

VLSFO supply remains tight in Singapore as ongoing terminal loading delays continue to disrupt bunkering operations for several suppliers. As a result, some January bookings have been pushed into February. Recommended lead times for the grade have expanded to 10–18 days, compared with 12–14 days last week. Tight supply conditions are expected to persist through the first half of February, according to a source.

In Indonesia, VLSFO availability remains steady at Jakarta, Surabaya, Balikpapan and Cigading, with suppliers typically quoting lead times of 2–3 days. LSMGO supply is also stable in Jakarta, Benoa, Surabaya and Batam. HSFO is reported to be well stocked in Jakarta, Surabaya and Balikpapan, a trader said.

Brent

The front-month ICE Brent contract has increased by $1.06/bbl on the day, to trade at $68.24/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude prices have edged higher, following the release of the US Energy Information Administration’s (EIA) weekly oil inventory data.

US commercial crude oil inventories fell by 3.5 million bbls to 420.3 million bbls in the week ending 30 January, according to the EIA. Declining inventories are widely interpreted as a sign of stronger demand.

“Sentiment was also boosted by a drop in inventories,” said Daniel Hynes, senior commodity strategist at ANZ Bank.

“The US Energy Information Administration’s weekly report for the week to January 30 was bullish on balance,” added Vandana Hari, founder of VANDA Insights.

Additional support for Brent futures has come from a trade agreement between the US and India, which has raised expectations of firmer global energy demand.

Downward pressure:

Oil prices have come under modest downward pressure after the US and Iran agreed to hold talks in Oman on Friday, easing fears that a possible military confrontation could disrupt oil supplies from the strategically important Middle East, Reuters reported.

Crude futures lost momentum “after the US and Iran agreed to hold talks on Friday, following earlier indications that negotiations had been called off amid differences over the venue and agenda,” said Vandana Hari, founder of VANDA Insights.

Additional pressure has come from a stronger US dollar and heightened volatility in precious metals.

A firmer dollar typically weighs on oil prices by making dollar-denominated commodities more expensive for buyers using other currencies, which can dampen demand.

By Tuhin Roy

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