Regional bunker benchmarks have mostly increased with Brent, and bad weather could impact bunkering in Ceuta today. 

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($27/mt) and Gibraltar ($15/mt), and unchanged in Rotterdam  
• LSMGO prices up in Rotterdam ($8/mt) and unchanged in Gibraltar, and down in Durban ($2/mt)  
• HSFO prices up in Rotterdam ($11/mt), and down in Gibraltar ($6/mt) 

Rotterdam’s VLSFO price has defied Brent’s upward movement in the past day. A lower-priced non-prompt VLSFO stem was booked in Rotterdam yesterday, which has averted any rise in the benchmark.

A lower-priced non-prompt HSFO stem was fixed at $483/mt for 500-1,500 mt in Gibraltar yesterday. The stem has contributed to drag the benchmark down in the past day. In contrast, Gibraltar’s VLSFO price has gained sharply. These diverging price moves have widened Gibraltar’s Hi5 spread from $78/mt yesterday to $99/mt now. Gibraltar’s VLSFO premium over Rotterdam has also gained by $15/mt to $43/mt now. Availability is normal across all grades in Gibraltar, with a trader recommending lead times of 3–5 days.  

A thunderstorm is forecast in Ceuta today, which could impact bunkering in the port. Nine vessels are due to arrive for bunkers in Ceuta today, up from eight yesterday, said shipping agent Jose Salama & Co. The port is witnessing slight congestion today with two vessels waiting to bunker at anchorage, while one vessel is waiting for berthing at one of the supplier terminals. Around six hours of delay is expected at the anchorage area today.

Brent

The front-month ICE Brent contract has gained $1.79/bbl on the day, to trade at $79.97/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price gained on signs of steady economic growth in the US.

The US Department of Commerce revised its gross domestic product (GDP) estimates upward, a key indicator of demand growth and consumer spending activity, for the second quarter.

The US GDP increased at an annualised rate of 3% in the second quarter of this year, up from the initial estimate of 2.8%, the commerce department’s Bureau of Economic Analysis (BEA) said. The increase primarily reflected growth in consumer spending, prompting market analysts to speculate a growth in crude oil demand in the world’s largest oil-consuming nation.

“Crude oil prices rallied as robust US economic data eased concerns about weaker demand,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Disruption to Libya’s oil production has escalated this week, adding further upward pressure on Brent’s price. Almost half of the OPEC country’s crude output, or about 700,000 b/d, was offline yesterday and exports from multiple ports were suspended, Reuters reported.

The dispute in Libya revolves around the control of its central bank, the only globally recognised depository of its oil revenues. “Oil exports from five eastern ports were suspended while the country’s output dipped further amid a battle to gain control of the central bank,” Hynes added.

Downward pressure:

Concerns over weakness in Chinese oil demand have continued to cap some of Brent’s price gains this week.

Oil consumption in China, the world’s second largest consumer dropped by 8% year-on-year to 13.55 million b/d in July, China’s General Administration of Customs (GACC) reported. This has raised concerns about the economic health of the country.

The oil market seems to be “sensitive” to bearish news from China, Hynes remarked.

Source: ENGINE by Manjula Nair and Aparupa Mazumder