Regional bunker benchmarks have tracked Brent’s upward movement, and availability of HSFO is tight off Malta. 

PHOTO: View from the Rock of Gibraltar, UK to Algeciras, Spain. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($13/mt), Gibraltar ($8/mt) and Rotterdam ($3/mt)  
• LSMGO prices up in Rotterdam and Gibraltar ($6/mt), and Durban ($2/mt)  
• HSFO prices up in Gibraltar ($11/mt), and unchanged in Rotterdam  

Gibraltar's VLSFO price has gained by $8/mt in the past day, while its HSFO price has risen by $11/mt. The price moves have narrowed Gibraltar’s Hi5 spread from $51/mt yesterday to $48/mt now. A 150-500 mt higher-priced VLSFO stem for non-prompt delivery was fixed at $569/mt in Gibraltar yesterday, which added upward pressure on the benchmark.

Prompt availability is tight in Gibraltar and Algeciras. A supplier is offering VLSFO and LSMGO in Algeciras with the earliest delivery date of 22 August.

Rotterdam’s HSFO price has remained steady in the past day. This has widened Gibraltar’s HSFO premium over Rotterdam's by $11/mt to $79/mt - the highest since 7 July.

Two vessels are waiting for bunkers in Gibraltar today, down from three yesterday, according to a source. Bunkering is proceeding smoothly in nearby Ceuta. Seven vessels are due to arrive for bunkers today, down from eight yesterday, said shipping agent Jose Salama & Co. 

Off Malta, HSFO has shown tightness in supply, and lead times of 5–7 days are advised for the grade, a trader said. VLSFO and LSMGO supply is relatively better, with lead times of 3–4 days advised for both grades. Bunkering disruptions may occur today due to rough weather conditions forecast in the area.

Brent

The front-month ICE Brent contract has gained $1.35/bbl on the day, to trade at $78.20/bbl at 09.00 GMT

Upward pressure:

Brent futures extended yesterday’s gains amid growing supply concerns as oil investors continued to focus on geopolitical developments in the Middle East.

Oil market analysts and traders have been on the edge since last week, after the assassination of senior leaders of Tehran’s regional proxies – Hamas and Hezbollah armed groups. “An aggressive response could lead to wider conflict in the Middle East and threaten oil supply,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Supply concerns have been exacerbated by production issues in Libya’s largest oil field. Libya's National Oil Corporation (NOC) declared force majeure in its El Sharara oil field on Tuesday, Reuters reports.

“Concerns about Middle East disruptions and a halt in Libya’s largest field output underpinned recent [Brent’s price] gains,” analysts from Saxo Bank remarked.

Commercial crude oil inventories in the US dropped by 3.73 million bbls to 429 million bbls in the week ending 26 July – the lowest since February, according to the US Energy Information Administration's (EIA). This news has further supported oil prices.

The EIA data shows that “demand for physical barrels remains robust, despite concerns about weak [US] economic activity,” Hynes added.

Downward pressure:

Weak demand growth in China, the world's second-largest oil consumer, has put downward pressure on Brent's price in recent weeks.

China imported 9.97 million b/d of crude oil in July, down by 12% from 11.30 million b/d imported in June, market intelligence provider JLC reported, citing data from the General Administration of Customs (GACC).

The East Asian country’s crude oil imports in July were about 3% lower compared to the same month last year. A fall in China's crude imports indicates a slowdown in the country's oil demand.

“Weaker Chinese oil demand was a key driver behind the weakness in oil prices,” two analysts from ING Bank said.

By Manjula Nair and Aparupa Mazumder

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