Bunker benchmarks in Americas ports have taken mixed directions, and Houston's Hi5 spread has narrowed to less than $100/mt.

PHOTO: An LPG tanker sailing west along the Houston Ship Channel on the way to Galveston Bay. Getty Images

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

• VLSFO prices up in Balboa ($6/mt), New York ($5/mt) and Los Angeles ($4/mt), and down in Houston ($26/mt) and Zona Comun ($2/mt)
• LSMGO prices up in Zona Comun ($38/mt), Balboa ($13/mt), New York ($6/mt) and Los Angeles ($4/mt), and down in Houston ($10/mt)
• HSFO prices up in Houston ($12/mt), Balboa ($6/mt) and New York ($2/mt), and down in Los Angeles ($2/mt)

Houston has seen a jump in the number of stems fixed in the past day. Five stems for both prompt and non-prompt delivery have been recorded by ENGINE since yesterday. Three stems have been for VLSFO and two for LSMGO.

Two LSMGO stems were fixed at lower prices than Houston’s benchmark noted a day ago, pulling the port’s LSMGO benchmark lower. Meanwhile, New York’s LSMGO price has gained marginally in the past day. This has widened New York’s LSMGO price premium over Houston from $29/mt to $45/mt.

Houston’s HSFO price has gained $12/mt with support from several firm offers at higher levels. Meanwhile, the port’s VLSFO price has dropped with pressure from three lower-priced stems. This has narrowed the port’s Hi5 spread by $38/mt to $75/mt.

Bunkering is currently proceeding normally in Argentina’s Zona Comun and the Galveston Offshore Lightering Area (GOLA). But bunker deliveries are expected to be suspended tomorrow at both anchorages as strong wind gusts are forecast.

Brent

The front-month ICE Brent contract has lost $0.67/bbl on the day, to trade at $81.95/bbl at 08.00 CDT (13.00 GMT) today.

Upward pressure:

Oil prices gained support following the news about the Iranian President’s death in a helicopter crash on Sunday. The news raised concerns about political stability in the oil rich country.

“In Iran, Supreme Leader Ayatollah Ali Khamenei named first Vice President Mohammad Mokhber as interim president following the death of President Ebrahim Raisi,” VANDA Insights’ founder and analyst Vandana Hari said.

Ukraine’s targeted drone attacks on two Russian energy facilities have prompted state-owned company Rosneft to shut operations at its Tuapse refinery in Krasnodar region over the weekend, the country’s defense ministry said.

Iran and Russia are OPEC+’s two leading oil producers and any further supply disruptions in the region can put the global oil market in a serious deficit, according to analysts. “The market waits for clarity from OPEC+ on its output policy,” two analysts from ING Bank said. The group is expected to convene early next month.

Downward pressure:

Brent’s price gains were capped as the global oil market grew wary of a slowdown in oil demand growth in the world’s largest oil consumer – the US.

Crude oil inventories in the US gained 2.48 million bbls in the week ended 17 May, according to the American Petroleum Institute (API) estimates, as opposed to market expectation of a 3.1-million-bbl draw.

A rise in US crude stocks is often considered a negative indicator of demand growth.

“[Brent] Crude oil trades lower for a third day amid softness in the physical market and after the API reported increases in crude and gasoline stocks,” analysts from Saxo Bank’s strategy team said.

The market’s narrative of ‘higher-for-longer’ interest rates this year strengthened after bearish remarks from the US Federal Reserve 's (Fed) officials.

“It does seem clear the [Fed] Committee remains biased to cut rates, but any policy easing will be determined by how inflation develops over the next few months,” Jordan Jackson, global market strategist at J.P. Morgan said.

Higher interest rates can dampen oil demand by increasing the cost of dollar-denominated commodities like oil for non-dollar holders.

By Debarati Bhattacharjee and Aparupa Mazumder

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