Europe & Africa Market Update 2 Nov

Bunker prices in European and African ports have dropped since Friday, and rough weather has caused a suspension in bunkering operations off Malta.

IMAGE: Tankers during a bunker operation off Malta. Getty Images

Changes on the day from Friday, to 09.00 GMT today:

• VLSFO prices down in Durban ($40/mt), Rotterdam ($37/mt) and Gibraltar ($10/mt)
• LSMGO prices down in Rotterdam ($89/mt), Gibraltar ($62/mt) and Durban ($15/mt)
• HSFO prices down in Gibraltar ($26/mt), Rotterdam ($19/mt) and Durban ($5/mt)
• B30-VLSFO price up in Rotterdam ($52/mt)

Bunker prices have broadly declined in European and African ports over the weekend, tracking Brent’s slide.

VLSFO price off Malta has fallen more sharply than Gibraltar's, by $45/mt. This has flipped the offshore anchorage's VLSFO price to a $31/mt discount compared to the Mediterranean port, from a $4/mt price premium seen on Friday.

Off Malta’s LSMGO holds a $56/mt discount to Gibraltar.

Fuel availability is tight for prompt supplies off Malta, and buyers are advised at least a week to secure supplies of any grade with good coverage, a trader said.

Rough weather is seen off Malta, with winds of between 30-35 knots gusting from the north-west, and swells between 2-4 meters.

Due to the rough weather conditions, all bunkering operations off Malta is suspended currently, port agent MH Bland said. Operations are expected to resume by Wednesday, a source told ENGINE.

Brent

The front-month ICE Brent contract has lost by $7.66/bbl on the day from Friday, to trade at $108.88/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has found some support from concerns that the oil market has little room left to absorb another supply shock.

The market has adapted to eight months of Middle East disruption, but its ability to absorb another shock “has diminished,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Persian Gulf exports remain constrained, tanker availability is tight and global distillate inventories sit around 5% below their five-year average, Hynes added.

Besides, US President Donald Trump has also repeatedly threatened to restart strikes on Iran after the US midterm elections, scheduled for tomorrow, leaving more room for supply disruptions.

“The oil market is likely to remain nervous this week ahead of the US midterm elections,” two analysts from ING Bank noted.

Downward pressure:

Brent’s price has come under pressure on hopes of progress in talks to end the war between Iran, and the US and Israel.

Iranian negotiators left talks with Qatari mediators in Doha yesterday, but not because of difficulties in the negotiations, Reuters reported, citing an official briefed on the meeting.

“It remains to be seen whether this [diplomacy] will lead to anything,” ING Bank’s analysts said.

The front-month ICE Brent contract has changed from December to January, which goes a long way to explain today’s drop in price.

Brent's December contract was trading around $117/bbl on Friday. However, the January contract opened near $111/bbl today, accounting for much of the roughly $7/bbl decline. 

By Nachiket Tekawade and Aparupa Mazumder

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