Europe & Africa Market Update 14 May

Prices across European and African ports have fallen over the past day, and fuel availability is stable in Turkiye's Istanbul.

IMAGE: Aerial view of a cargo ship in transit in Istanbul, Türkiye. Getty Images

Changes on the day from 09.00 GMT today:

• VLSFO prices down in Durban ($44/mt), Rotterdam ($33/mt) and Gibraltar ($24/mt)
• LSMGO prices down in Durban ($162/mt), Gibraltar ($21/mt) and Rotterdam ($15/mt)
• HSFO prices down in Gibraltar ($14/mt) and Rotterdam ($10/mt)
• B30-VLSFO prices down in Gibraltar ($44/mt) and Rotterdam ($5/mt)

Regional bunker benchmarks have fallen over the past day, tracking the fall in Brent.

Algeciras’ ULSFO price has slumped by $118/mt over the past day. Bunkering ULSFO in Algeciras is now at a $180/mt discount to ULSFO off Malta, while it is around $115/mt cheaper compared to Valencia and Barcelona.

Demand for ULSFO has increased since May last year, when the Mediterranean Emission Control Area was enforced, requiring ships to burn fuel with maximum 0.1% sulphur content.

The supply of ULSFO is quite regular in Algeciras, a trader said.  

Off Malta, ULSFO demand is lesser than other fuel grades, but it has increased in the past year, while VLSFO demand has fallen, another trader said. Two out of five suppliers now offer ULSFO at the offshore anchorage.

In Istanbul, ULSFO demand was good till April but has since reduced due to low price gap with LSMGO, a local supplier told ENGINE

Currently Istanbul’s ULSFO is trading almost at parity with the port’s LSMGO price at $1,485/mt.

Availability of ULSFO and other grades is normal in Istanbul and deliveries are available promptly, a trader told ENGINE.

Brent

The front-month ICE Brent contract has declined by $1.08/bbl on the day, to trade at $106.24/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has found some support after the US Energy Information Administration (EIA) reported a decline in US crude stocks.

Commercial US crude oil inventories decreased by 4.3 million bbls to 452.9 million bbls in the week ending 8 May, according to data from the EIA.

“In the US, EIA weekly data continued to show a tightening in the domestic oil market,” two analysts from ING Bank said. “The draw is driven by continued strength in crude oil exports,” they said.

The American Petroleum Institute (API) reported a 2.2 million bbl-decline the previous day.

A decline in US crude stocks typically indicates improvement in demand for oil and can put some upward pressure on Brent's price.

Downward pressure:

Brent’s price has moved lower ahead of US President Donald Trump’s meeting with Chinese counterpart Xi Jinping this week.

“The oil market is eagerly awaiting the outcome of the meeting between President Trump and President Xi, and whether it could yield some positive results on the Iran war,” ING Bank’s analysts said.

The meeting – during Trump’s state visit to Tiananmen Square in Beijing – is expected to include high-level discussions on the rapidly evolving Middle East situation, while also laying the groundwork for deeper long-term cooperation between the two sides.

Some market participants hope China can pressure Iran into reaching an agreement with the US that will potentially end the conflict and allow energy flows through the Strait of Hormuz to resume.

“The market could be pinning too much hope on the US-China talks yielding some positive results on Iran,” ING Bank’s analysts added.

By Nachiket Tekawade and Aparupa Mazumder

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