Europe & Africa Market Update 27 Jan

Fuel prices across European and African ports have mostly fallen, and prompt VLSFO and LSMGO deliveries are tight in the ARA hub.

IMAGE: View of the entrance to the Port of Rotterdam, Netherlands. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices down in down in Gibraltar ($20/mt), Durban ($14/mt) and Rotterdam ($3/mt)
• LSMGO prices down in Rotterdam ($25/mt) and Gibraltar ($16/mt)
• HSFO prices up in Rotterdam ($2/mt), and down in Durban ($15/mt) and Gibraltar ($7/mt)
• B30-VLSFO prices down in Gibraltar (20/mt) and Rotterdam ($12/mt)

Most bunker benchmark prices across Rotterdam, Gibraltar and Durban have significantly dipped over the past session, tracking the fall in Brent.

Rotterdam’s LSMGO price has seen the steepest fall among the three ports, while the port’s HSFO price has recorded a small gain.

Prompt supplies of VLSFO and LSMGO are constrained in the ARA hub, with buyers requiring a notice of around 5-7 days, a trader said. HSFO supplies are available more readily, the trader added.

Gibraltar’s VLSFO price has fallen more than Rotterdam’s and is now priced around $18/mt above the Dutch port, narrowing sharply from a $35/mt premium seen yesterday.

Inbound traffic remains suspended in Gibraltar, and congestion is increasing at the port, with around 24 vessels currently awaiting bunkers, port agent MH Bland said. Port operations are suspended at Algeciras and Ceuta too, the port agent added.

Rough winds and waves forecast intermittently until 9 February at all three ports in the Gibraltar Strait.

Brent

The front-month ICE Brent contract has declined by $0.85/bbl on the day, to trade at $65.27/bbl at 09.00 GMT.

Upward pressure:

Brent crude has felt some upward pressure as harsh winter weather in the US has disrupted production across major crude-producing regions.

US crude oil output has fallen by as much as 250,000 b/d due to severe weather conditions, Reuters reported.

“A winter storm in the US is likely to spur increased heating demand amid snow, ice and freezing temperatures,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Harsh weather conditions are also “raising concerns about disruptions to energy supply,” with US refineries struggling to operate in full force, according to Hynes.

Downward pressure:

Brent’s price has moved lower following news that the Chevron-led consortium operating Kazakhstan’s Tengiz oilfield has resumed production after last week’s fire.

The fire that damaged a power generation and distribution facility on 18 January forced a temporary shutdown of the oilfield.  

The oilfield is operated by a consortium led by US-headquartered Chevron, which holds a 50% stake, alongside ExxonMobil with 25%, Kazakhstan’s state oil company KazMunayGaz with 20%, and Russia’s Lukoil with 5%.

The oilfield “accounts for most of Kazakhstan’s exports,” Hynes added.

By Nachiket Tekawade and Aparupa Mazumder

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