Europe & Africa Market Update 29 Sep

Bunker prices in European and African ports have mostly declined, while fuel availability is stable off Malta.

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

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($35/mt), Gibraltar ($25/mt) and Rotterdam ($20/mt)
• LSMGO prices down in Rotterdam ($59/mt), Gibraltar ($51/mt) and Durban ($49/mt)
• HSFO prices down in Durban ($39/mt), Gibraltar ($14/mt) and Rotterdam ($13/mt)
• B30-VLSFO price up in Rotterdam ($50/mt)

LSMGO prices in Rotterdam and Gibraltar have dropped $51-59/mt over the past day.

Comparatively, the LSMGO price off Malta has dropped more sharply, by $98/mt. Two lower-priced stems of less than 50 mt, fixed in the offshore bunkering area at around $1,495-1,509/mt, have put additional downward pressure on the benchmark.

This has reduced Malta’s price premium over Gibraltar by $47/mt in a single day.

Meanwhile, Malta’s price discount to Piraeus has narrowed by only $15/mt, as Piraeus’ LSMGO price has seen a sharp $113/mt drop.

LSMGO is seeing high demand off Malta. Fuel availability is stable, and lead times have reduced to 3-4 days for LSMGO, VLSFO and ULSFO, compared to 5-7 days in the previous week, a trader said.

Brent

The front-month ICE Brent contract has lost by $2.80/bbl on the day, to trade at $105.24/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has continued to trade above the $105/bbl mark after US President Donald Trump rejected Iran’s peace proposal to reopen the Strait of Hormuz.

“Oil began the session firmer after President Donald Trump rejected Iran’s 7-day proposal,” SPI Asset Management managing partner Stephen Innes wrote.

Subsequently, Iran’s foreign minister Abbas Araghchi said that his country is prepared to reopen the Strait of Hormuz, only if Washington accepts Tehran’s seven-day peace framework.

The latest developments solidify expectations of an extended conflict in the Middle East – enforcing the ongoing bottlenecks for commercial shipping in the Strait of Hormuz.

“[Oil] traders are not pricing an imminent diplomatic breakthrough, but neither are they pricing a permanent closure of the Strait. We remain somewhere in the uncomfortable middle,” Innes said.

Downward pressure:

Money managers and hedge funds have reduced their net-long bets on ICE Brent futures in the week to 22 September.

Speculators sold a little more than 64,500 lots as of 22 September, decreasing net-long positions in Brent futures to over 218,000 lots.

When speculators reduce net-long positions, oil prices tend to decline. Conversely, when they boost these positions, prices typically rise, leading to a cycle where their actions can influence oil prices and the market.  

By Nachiket Tekawade and Aparupa Mazumder

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