Europe & Africa Market Update 24 July

Bunker prices across Europe and Africa have dropped, while bunkering in Gibraltar is delayed due to port congestion.

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

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($16/mt), Rotterdam ($14/mt) and Gibraltar ($6/mt)
• LSMGO prices down in Durban ($56/mt), Rotterdam ($16/mt) and Gibraltar ($6/mt)
• HSFO prices unchanged in Durban, and down in Rotterdam ($8/mt) and Gibraltar ($4/mt)
• B30-VLSFO prices down in Gibraltar ($88/mt) and Rotterdam ($63/mt)

Algeciras’ LSMGO price has fallen by $38/mt, possibly weighed down by two stems of less than 500 mt fixed at $1,3130-1,314/mt. Its discount to Gibraltar’s LSMGO price has widened by $32/mt over the past day.

The Spanish port’s VLSFO price has slumped by $34/mt. Two stems in the 150-500 mt and 500-1,500 mt size ranges, fixed at $699-750/mt may have exerted downward pressure on the benchmark. Its discount to Gibraltar's VLSFO price has widened by $28/mt.

Algeciras’ HSFO price has decreased by $17/mt, half the decline in its VLSFO price. Consequently, the port's Hi5 spread has narrowed by $17/mt to $125/mt.

This reduces the economic incentive for scrubber-fitted ships to bunker HSFO there. Gibraltar’s Hi5 spread remains considerably wider at $155/mt.

Fuel availability remains tight across the Gibraltar Strait for prompt delivery dates, with buyers advised to book stems around 5-7 days in advance to secure supplies of any fuel grade, a trader told ENGINE.

Ships calling at Gibraltar for bunkers are facing long queues, with around 14 vessels waiting as of Friday morning, according to port agent MH Bland. Some suppliers were running 6-10 hours behind schedule on Friday morning, the port agent added.

Bunkering delays have been also reported at the neighbouring port of Algeciras, where some suppliers were delayed by 18 hours earlier today, MH Bland said.

Brent

The front-month ICE Brent contract has lost $0.14/bbl on the day, to trade at $97.68/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price has held largely steady amid supply disruption concerns.

The US Central Command (CENTCOM) has been striking Iran for 13 consecutive days, while Tehran has conducted further rounds of retaliatory attacks on US allies in the Gulf.

“Further escalation in the Persian Gulf and fears of a widening conflict are putting a significant amount of oil supply at risk,” two analysts from ING Bank noted.

The Red Sea has also become a major point of concern for the oil market after Yemen’s Iran-backed Houthi militants struck two Saudi Arabian crude oil tankers yesterday.

“Houthi attacks on Saudi vessels in the Red Sea have the potential to widen this conflict, leading to further escalation,” ING Bank’s analysts said.

Downward pressure:

An unexpected increase in US crude stocks has put some downward pressure on Brent’s price this week.

US crude oil inventories gained by 2 million bbls to 411.7 million bbls in the week ending 17 July, according to data from the US Energy Information Administration (EIA).

The American Petroleum Institute (API) reported a slightly higher inventory rise of 2.6 million bbls during the same week.

A build in US crude stocks can indicate lower demand for oil.

By Nachiket Tekawade and Aparupa Mazumder

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