Europe & Africa Market Update 10 Aug

Bunker prices in European and African ports have moved in mixed directions in the past day, while prompt fuel availability is tight in the Gibraltar Strait ports.

IMAGE: Aerial view of the Bay of Gibraltar. Getty Images

Changes on the day from Friday to 09.00 GMT today:

• VLSFO prices up in Rotterdam ($10/mt), and down in Gibraltar ($35/mt) and Durban ($8/mt)
• LSMGO prices up in Rotterdam ($46/mt), Durban ($6/mt) and Gibraltar ($5/mt)
• HSFO prices up in Gibraltar ($13/mt), and down in Durban ($41/mt) and Rotterdam ($1/mt)
• B30-VLSFO price up in Rotterdam ($50/mt)

Gibraltar’s VLSFO price has dropped over the weekend, while Rotterdam’s VLSFO price has gained. Two lower priced 50-150 mt VLSFO stems fixed in Gibraltar at $671-676/mt have put downward pressure on the port’s benchmark price.

Conversely, Gibraltar’s HSFO price has increased since Friday, narrowing the port’s Hi5 spready by $48/mt. This considerably decreases the economic incentive for ships to bunker HSFO in Gibraltar.

Meanwhile, Gibraltar’s LSMGO price gain has been limited compared to a steep rise in Rotterdam’s price. Two LSMGO 150-500 mt stems, fixed at a low price of $1,208/mt, has weighed on the price.

Gibraltar’s LSMGO price premium over Rotterdam has narrowed by $41/mt since Friday.

Fuel availability is tight for prompt dates in the Gibraltar Strait ports, with buyers recommended lead times of around a week to secure deliveries of any fuel grade, a trader told ENGINE.

Brent

The front-month ICE Brent contract has gained by $1.53/bbl on the day from Friday, to trade at $84.56/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has opened the week higher, after market expectations of a swift reopening of the Strait of Hormuz took a backseat.

Tehran has demanded six major changes in Washington's foreign policy as a prerequisite to allow commercial vessels to safely transit the critical oil chokepoint, that carried one-fifth of global seaborne oil flows prior to the conflict.

“Oil prices remain supported by uncertainty surrounding the Strait of Hormuz,” two analysts from ING Bank noted.

The demands include a total cessation of all US military action in the region and the immediate withdrawal of all US naval and air forces from around Iran, among others.

“While US President Donald Trump said Washington is "semi-negotiating" with Iran… significant hurdles remain before any broader agreement is reached,” ING Bank’s analysts added.

Downward pressure:

Brent crude’s price has felt some downward pressure after Baker Hughes reported a rise in US crude oil rig activity.

The total number of rigs drilling for crude oil in the US increased by three over the week to 454 units last week.

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.

By Nachiket Tekawade and Aparupa Mazumder

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