Europe & Africa Market Update 3 Feb

Fuel prices across European and African ports have recorded gains, while VLSFO and LSMGO prompt supplies remain tight in the ARA hub.

IMAGE: The Europoort area in the Port of Rotterdam. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Gibraltar ($18/mt), Rotterdam ($13/mt) and Durban ($8/mt)
• LSMGO prices up in Gibraltar ($32/mt) and Rotterdam ($16/mt)
• HSFO prices up in Durban ($27/mt), Gibraltar ($12/mt) and Rotterdam ($6/mt)
• B30-VLSFO prices up in Gibraltar ($29/mt) and Rotterdam ($18/mt)

Bunker prices at Rotterdam, Gibraltar and Durban have recovered over the past session, correcting steep losses from the day before.

Gibraltar’s LSMGO price has seen the sharpest increase, twice as much as Rotterdam's. A lower priced 50-150 mt stem, fixed at $662/mt in the Dutch port, may have limited gains in the grade's price.

Consequently, the Dutch port’s discount to Gibraltar has widened by $16/mt to $77/mt in a single day.

Taking HSFO and VLSFO bunkers at the Dutch port also offers a $33-$34/mt discount compared to Gibraltar.

Securing supplies of VLSFO and LSMGO bunkers could prove to be tight for prompt delivery dates, as suppliers are requesting lead times of around 5-7 days for both grades, a trader said. HSFO supplies are available more easily with a notice of around 2-4 days.

Brent

The front-month ICE Brent contract has inched $0.23/bbl lower on the day, to trade at $65.61/bbl at 09.00 GMT.

Upward pressure:

Brent’s price has felt some upward pressure after Washington and New Delhi struck a deal yesterday, that is expected to reduce US tariffs on Indian imports from 25% to 18%.

US President Donald Trump said that India has agreed to buy more US oil and reduce its imports of Russian crude.

If implemented, the move could force Moscow to reduce output, ultimately tightening the global market, according to two analysts from ING Bank.

Moreover, lower tariffs have eased concerns over further trade restrictions between the world’s two major oil consumers, reducing fears of a drag on global economic growth.

Downward pressure:

Brent crude has extended recent losses as geopolitical concerns from the Middle East continue to ease.

Earlier this week, Trump said Iran is “seriously talking” with Washington. “Oil prices have fallen due to reduced risk after President Trump stepped back from attacking Iran,” Price Futures Group’s senior market analyst Phil Flynn said.

Iran is the fourth-largest OPEC member, producing around 3.2 million b/d of crude oil. A US military intervention could potentially threaten oil supply flows from the Middle East, according to market analysts.

“President Trump downplayed threats from Iran’s supreme leader, Ayatollah Ali Khamenei, of a regional war, reiterating that he’s hopeful they’ll make a deal,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

By Nachiket Tekawade and Aparupa Mazumder

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