Europe & Africa Market Update 22 Mar 2024

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Regional bunker benchmarks have mostly tracked Brent’s downward movement, and strong wind gusts could disrupt bunkering in Gibraltar on Monday, reports Engine. 

Changes on the day to 09.00 GMT today:

  • VLSFO prices up in Durban ($2/mt) and Gibraltar ($1/mt), and down in Rotterdam ($1/mt) 
  • LSMGO prices down in Durban ($23/mt), Rotterdam ($13/mt) and Gibraltar ($5/mt) 
  • HSFO prices unchanged in Gibraltar and down in Rotterdam ($3/mt) 

Bunkering disruptions 

Rotterdam’s LSMGO price has outpaced Gibraltar’s price drop in the past day. A prompt lower-priced LSMGO stem was fixed at $778/mt for prompt delivery in Rotterdam in the past session, which contributed to drag the benchmark down. The port’s LSMGO discount to Gibraltar has also widened by $8/mt to $86/mt now.

Gibraltar’s VLSFO price has defied Brent’s downward pull and gained marginally in the past day, while the port’s HSFO price has held steady. These price movements have led to a slight widening of Gibraltar’s Hi5 spread by $1/mt, to $65/mt now. 

Bunkering disruptions are likely to occur in the Gibraltar Strait over the weekend. Strong wind gusts in the range of 21-34 knots are forecast in the region until the weekend. Rough weather is also forecast in Gibraltar on Monday, when wind gusts of 34 knots are forecast to hit the port. Currently, four vessels are waiting to receive bunkers in Gibraltar, unchanged from yesterday, a source says.

Congestion has eased slightly in the nearby Ceuta port in the past day. Five vessels are due to arrive for bunkers in Ceuta today, down from nine yesterday, says shipping agent Jose Salama & Co.

Brent

The front-month ICE Brent contract shed $0.12/bbl on the day, to trade at $85.77/bbl at 09.00 GMT.

Upward pressure:

Oil market analysts have maintained a positive outlook following the US Federal Reserve’s (Fed) reiterating its plan to cut interest rates three times this year, signalling an increase in demand growth from the world’s largest crude oil consumers.

The Fed’s indication of potential rate cuts three times this year has sparked optimism in the market, according to SPI Asset Management’s managing partner Stephen Innes. He noted that such signals are typically viewed as favourable for oil sales and the global economy.

Supply-side concerns have supported Brent’s upward momentum further this week. The extension of OPEC+ supply cuts until the end of June, combined with a series of Ukrainian drone attacks on Russian energy facilities and ongoing unrest in the Red Sea, have contributed to keep Brent futures above $85/bbl.

Saxo Bank’s strategy team highlighted that concerns over the interest rate outlook and supply tightness are continuing to bolster prices.

Downward pressure:

Brent futures have come down following speculations regarding a potential ceasefire agreement between Israel and Hamas.

Analysts suggest that a ceasefire in the Gaza Strip could alleviate geopolitical tensions in the Middle East and ease supply constraints in the oil market, which could potentially put downward pressure on the price of Brent crude.

The US has submitted a draft resolution to the United Nations Security Council (UNSC) calling for an immediate ceasefire. US Secretary of State Anthony Blinken expressed optimism that ongoing discussions and negotiations in Qatar could lead to an agreement between Israel and Hamas.

The draft resolution submitted by the United States to the UNSC has triggered a bull market squeeze, Innes said. A bull squeeze is a market situation when sudden price declines incite traders and money managers to liquidate their long positions to avoid losses.

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Source: Engine

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