Europe & Africa Market Update 28 Jan

Most fuel prices across European and African ports have surged, and weather-related disruptions escalate in the Gibraltar Strait ports.

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

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Gibraltar and Durban ($18/mt), and down in Rotterdam ($2/mt)
• LSMGO prices down in Rotterdam ($32/mt) and Gibraltar ($25/mt)
• HSFO prices up in Durban ($18/mt), Gibraltar ($17/mt) and Rotterdam ($12/mt)
• B30-VLSFO prices up in Gibraltar (38/mt) and Rotterdam ($27/mt)

Compared to the gains recorded by the prices of most fuels, Rotterdam’s VLSFO price has shown a marginal dip. The benchmark may have experienced a downward push due to a lower-priced 500-1500 mt stem, fixed at $416/mt.

This has more than doubled Gibraltar’s premium over Rotterdam’s VLSFO in the past session to around $38/mt, compared to yesterday's premium of $18/mt.

Port operations and pilotage are suspended at the ports of Gibraltar, Algeciras and Ceuta, port agent MH Bland said.

Congestion is increasing at Gibraltar with around 42 vessels presently waiting for bunkers, the port agent said. Congestion is also seen in Algeciras, a source said.

The increasing backlogs is expected to cause delays in bunkering and buyers are recommended higher lead times of around 8-10 days for all fuel grades at all three Gibraltar Strait ports, in light of the disruption, a trader said.

Rough winds of above 30 knots and waves over 2.5 metres are forecast intermittently until 7 February.

Brent

The front-month ICE Brent contract has moved $2.50/bbl higher on the day, to trade at $67.77/bbl at 09.00 GMT.

Upward pressure:

US crude oil production and exports have been majorly disrupted this week due to harsh winter storms. This has supported Brent’s price.

US refiners have lost 2 million b/d, or about 15% of the country's total output over the weekend, Reuters reported.

“A winter storm in the US has disrupted refineries on the Gulf Coast and elsewhere,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Meanwhile, a weaker US dollar has lent further support. The dollar is trading close to a four-year low against major currencies, Reuters reported.

This slide is making dollar-priced commodities such as crude oil more affordable for holders of other currencies.

Downward pressure:

Brent crude has felt some downward pressure after Kazakhstan said that output at the Tengiz oilfield – one of the OPEC+ member’s largest crude oil production sites – will resume full production within a week, according to Reuters.

“Kazakhstan’s oil output is set to recover, with Tengizchevroil restoring power to its Tengiz field,” two analysts from ING Bank said.

Besides, Kazakhstan’s pipeline operator Caspian Pipeline Consortium (CPC) said it has restored full loading capacity at its Black Sea terminal after completing maintenance work at one of its three mooring points that was hit by Ukrainian drones.

By Nachiket Tekawade and Aparupa Mazumder

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