Americas Market Update 28 Nov 2023
Prices have mostly moved up in Americas ports, and bunker operations in GOLA have resumed amid calmer weather conditions.
PHOTO: Harbour craft ahead of a cargo vessel in the Houston area. Port Houston
Changes on the day, to 07.00 CST (13.00 GMT) today:
- VLSFO prices up in Houston ($16/mt), unchanged in Los Angeles and New York, and down in Zona Comun ($5/mt) and Balboa ($3/mt)
- LSMGO prices up in Houston ($26/mt), Balboa ($17/mt) and Zona Comun ($12/mt), and unchanged in New York and Los Angeles
- HSFO prices up in New York ($14/mt), and unchanged in New York and Los Angeles
Houston has again seen a jump in the number of stems fixed in the past day. Five stems have been recorded by ENGINE, out of which three stems have been for LSMGO and two for HSFO.
Of the three LSMGO stems fixed in the past day, one stem fixed at a higher price than Houston’s benchmark noted a day ago, contributed to push the benchmark higher. Meanwhile, New York and Los Angeles’ LSMGO prices remained unchanged in the past day, narrowing their LSMGO price premiums of $105/mt and $120/mt over Houston's, to $79/mt and $94/mt, respectively.
New York’s HSFO price has gained in the past day, while the port’s VLSFO price held unchanged. This has narrowed the port’s Hi5 spread below $100/mt in the past day.
Bunker operations in the Galveston Offshore Lightering Area (GOLA) have resumed this morning after being suspended yesterday due to rough weather conditions. Demand for VLSFO and LSMGO has increased at the anchorage. However, strong gale-force wind gusts of up to 44 knots are forecast to hit the region again from Thursday, which could hamper bunker deliveries again.
The front-month ICE Brent contract has inched $0.71/bbl higher on the day, to trade at $80.69/bbl at 07.00 CST (13.00 GMT) today.
Brent futures remained supported amid expectations that OPEC+ would extend its voluntary production cuts into 2024.
OPEC+ is scheduled to hold a virtual meeting on 30 November to discuss output policy for next year.
The current situation of the crude oil market seems to be “undervalued” as energy demand typically peaks during the fall and spring seasons, analysts said. “Once we get through the shoulder [winter] season we’re going to see significant drawdowns in crude supplies in the coming weeks and months,” said Price Futures Group’s senior market analyst Phil Flynn.
Besides, OPEC’s largest producer Saudi Arabia could “try to shock the market” with an additional 1 million b/d lollipop cut, Flynn added.
“The group [OPEC+] has always found a way to get an agreement over the line before, even if that means the biggest producers taking on more of the additional commitments,” commented OANDA’s senior market analyst Craig Erlam.
Meanwhile, Brent futures felt some downward pressure amid speculations of a dispute between Saudi Arabia and other OPEC member nations over the group's production targets for next year. The group’s joint ministerial meeting has allegedly been pushed back to 30 November because of this.
“The OPEC+ meeting will be this week’s most impactful event in oil markets,” Erlam said. The meeting got delayed by four days, “so there’s clearly some disagreement within the alliance,” he added.
Additionally, concerns about surplus supplies in the oil market have put a lid on Brent’s price. There are wide expectations that Angola, Nigeria, and Iran will increase their production levels in 2024.
By Debarati Bhattacharjee and Aparupa Mazumder
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