Americas Bunker Prices Rise Amid Brent Surge

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Americas bunker prices have mostly gained with Brent, and bad weather has halted bunkering in GOLA and Zona Comun, reports Engine.

Changes on the day to 08.00 CDT (13.00 GMT) today:

  • VLSFO prices up in Los Angeles ($3/mt), Balboa and New York ($2/mt), unchanged in Zona Comun, and down in Houston ($11/mt)
  • LSMGO prices up in Los Angeles ($38/mt), Zona Comun, Balboa and New York ($3/mt), and down in Houston ($28/mt)
  • HSFO prices up in Los Angeles ($11/mt), Balboa and New York ($2/mt), and down in Houston ($7/mt)

Houston’s VLSFO price has reversed yesterday’s gains and dropped in the past day. The grade has been offered firm at lower levels than where the port’s benchmark stood yesterday. Meanwhile, New York’s VLSFO price has seen a modest uptick since yesterday, though it continues to trade at a $38/mt discount to Houston’s.

Los Angeles’ LSMGO price has gained significantly in the past day with support from a higher-priced 150-500 mt stem. Meanwhile, Seattle’s LSMGO benchmark has seen a slight increase. This divergence has flipped Seattle’s premium of $28/mt over Los Angeles to a $7/mt discount.

Strong demand in Los Angeles and Long Beach this week has tightened availability of fuel grades for immediate delivery.

Bunker operations have been suspended at Argentina’s Zona Comun anchorage due to rough weather conditions. The weather is forecast to remain rough throughout this week, with wind speeds forecast to intensify further and touch 44 knots on Sunday. However, there has not been any backlog so far due to low demand at the anchorage.

Bunker deliveries have also remained halted in the Galveston Offshore Lightering Area (GOLA), where weather conditions are rough. GOLA is currently experiencing gale-force wind gusts of 44 knots. Calmer weather is forecast from this evening onwards and could allow bunker operations to resume at the anchorage.

Brent

The front-month ICE Brent contract has gained $0.21/bbl on the day, to trade at $89.96/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Brent has surpassed $90/bbl this week amid heightened geopolitical tensions in the Middle East and fears of supply disruptions.

Iran has threatened to restrict access to the Strait of Hormuz in retaliation for recent Israeli attacks on Syria. “The Strait of Hormuz is the world’s most important oil chokepoint because large volumes of oil flow through the strait,” the US Energy Information Administration (EIA) said. Around 20% of global oil supply transits through this strait daily, according to the EIA, and disruptions could have severe knock-on impacts on the global oil market.

“We remain bullish on oil but don’t expect it to reach $100,” energy-focused hedge fund investor Eric Nuttall told Bloomberg. He argues that the oil market is “fundamentally tight” as demand remains strong despite concerns over the US economy, that US shale supply growth is under pressure, while OPEC+ is cutting supply.

Downward pressure:

Commercial crude oil inventories in the US grew by 5.84 million bbls on the week to 457 million bbls on 5 April, according to the EIA. This is its highest level since July last year.

US consumer price inflation strengthened in March, according to the latest Consumer Price Index data that was released on Wednesday by the Bureau of Labor Statistics. The tug of war between rising inflation in the US and the Federal Reserve’s interest rate dilemma remains a metaphorical chink in Brent’s armour.

Higher consumer price inflation in the US could lead the Federal Reserve to delay interest rate cuts, which could contribute to dent oil demand in the US.

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Source: Engine