Europe & Africa Market Update 19 March 2024

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Bunker benchmarks in most European and African ports have moved in mixed directions, and prompt availability is good in Las Palmas, reports Engine.

Bunker fuel availability

Changes on the day to 09.00 GMT today:

  • VLSFO prices up in Durban ($3/mt), unchanged in Rotterdam, and down in Gibraltar ($1/mt)
  • LSMGO prices unchanged in Rotterdam, and down in Durban ($20/mt) and Gibraltar ($1/mt)
  • HSFO prices up in Gibraltar ($14/mt) and Rotterdam ($2/mt)

Rotterdam’s HSFO price gain has been smaller compared to Gibraltar’s HSFO. One lower-priced HSFO stem fixed in Rotterdam yesterday has capped the benchmark’s further gains. The port’s HSFO discount to Gibraltar’s HSFO has widened from $95/mt yesterday to $107/mt now.

Two lower-priced stems, one each for VLSFO and LSMGO, booked in Gibraltar for non-prompt delivery in the past day, have exerted downward price pressure on both benchmarks. Minimal congestion has been reported in Gibraltar today, with two vessels currently waiting for bunkers, unchanged from yesterday, a source says.

Bunkering is also proceeding smoothly in the nearby Ceuta port. Six vessels are due to arrive for bunkers today, down from eight yesterday, says shipping agent Jose Salama & Co. The suppliers are not reporting any delays.

Bunker fuel availability in the Canary Islands’ port of Las Palmas has improved this week after extreme supply tightness last week. Most suppliers are able to offer prompt delivery dates across all three grades, according to a trader.

Some ships calling for bunkers in the South African port of Durban are experiencing delays in berthing because of increased vessel traffic from the Red Sea diversions. A tanker vessel that arrived for bunkers on Saturday was able to secure berthing space on Monday, resulting in a 48-hour delay, shipping agent Trade Ocean said.

Brent

The front-month ICE Brent contract gained $1.04/bbl on the day, to trade at $86.89/bbl at 09.00 GMT.

Upward pressure:

Brent futures broke above $86/bbl today, driven by mounting supply concerns due to escalating geopolitical tensions in both Russia and the Middle East.

Concurrently, improving demand in China, as indicated by recent data on Chinese crude imports and throughput, has also contributed to Brent’s price surge. According to China’s General Administration of Customs (GACC) data, crude imports totalled 88.31 million mt (equivalent to 10.74 million b/d) in January and February. This marks a 3% increase from last year’s figure of 10.4 million b/d during the same period.

Brent oil prices have soared to a four-month high, propelled by bullish macroeconomic data from China and heightened geopolitical tensions resulting from a fresh wave of Ukrainian drone attacks targeting Russian energy infrastructure, SPI Asset Management’s managing partner Stephen Innes highlighted.

Additionally, news of the Iraqi Ministry of Oil planning to slash the country’s total oil exports to 3.3 million b/d starting April has further bolstered Brent’s price gains. It took this decision to reduce exports in the upcoming months to compensate for exceeding its OPEC+ production quotas in January and February.

There is potential for Brent to gain further as “OPEC compliance should be improving” with this announcement Price Futures Group’s senior market analyst Phil Flynn noted.

Downward pressure:

Brent’s price gains were limited by speculation surrounding a potential delay in an interest rate cut by the US Federal Reserve’s Federal Open Market Committee (FOMC), scheduled to convene on Wednesday. The prospect of a higher US interest rate can render dollar-denominated commodities like oil more expensive for non-dollar holders, potentially curbing oil demand growth.

Iran recently signed contracts to develop six new oil fields valued at $13 billion, aiming to increase daily production by 350,000 b/d, as reported by its state-owned news agency IRNA. The investments in expanding oil fields could enhance the country’s production in the future.

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Source: Engine