East of Suez Market Update 8 Oct
Prices have risen for all grades across East of Suez ports, and availability remains tight in Zhoushan despite muted demand.
Changes on the day to 17.00 SGT (09.00 GMT) today:
- VLSFO prices up in Zhoushan ($29/mt), Fujairah ($21/mt) and Singapore ($17/mt)
- LSMGO prices up in Fujairah ($45/mt), Zhoushan ($43/mt) and Singapore ($26/mt)
- HSFO prices up in Zhoushan ($30/mt), Singapore ($24/mt) and Fujairah ($22/mt)
- B30-VLSFO price up in Singapore ($35/mt)
Zhoushan's HSFO price has climbed by $30/mt, the steepest increase among the three major Asian bunker ports. Its VLSFO price has risen by $29/mt, also the largest of the three, and its LSMGO price has risen by $43/mt, second only to Fujairah's $45/mt. Its HSFO price now stands at a $103/mt premium over Singapore and a $196/mt premium over Fujairah. Its VLSFO price is at a $35/mt premium over Singapore and a $51/mt discount to Fujairah.
Zhoushan's HSFO price has risen for five consecutive weeks, and its average so far this month is the highest monthly level since November 2021, according to ENGINE data.
Compared with a year ago, monthly average prices in Zhoushan are up by around 100% for HSFO and LSMGO and by around 90% for VLSFO.
Availability of bunker fuel in Zhoushan remains tight even though demand is muted, with several suppliers reporting low stock levels. VLSFO lead times have shortened to about 12 days from 14 days last week. LSMGO lead times have lengthened to 12 days from 10 days, and HSFO lead times have edged up to about 15 days from 14 days.
Bunker prices in Hong Kong have increased in step with those in Zhoushan. Hong Kong's VLSFO price has risen by $32/mt, slightly more than Zhoushan's, widening Zhoushan's discount to Hong Kong from $7/mt to $10/mt.
Availability is largely unchanged in Hong Kong, with suppliers continuing to advise lead times of around seven days for the major grades.
Brent
The front-month ICE Brent contract has gained by $2.58/bbl on the day, to trade at $104.18/bbl at 17.00 SGT (09.00 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 Tuhin Roy and Aparupa Mazumder
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