Regional bunker benchmarks have moved in mixed directions, and bunkering could be impacted in Gibraltar Strait ports tomorrow due to bad weather.

PHOTO: Durban port at sunrise. Getty Images

Changes on the day, from Friday to 09.00 GMT today:

• VLSFO prices up in Durban ($3/mt) and Gibraltar ($1/mt), and down in Rotterdam ($7/mt) 
• LSMGO prices up in Durban ($12/mt), unchanged in Rotterdam, and down in Gibraltar ($9/mt) 
• HSFO prices down in Rotterdam ($7/mt) and Gibraltar ($1/mt) 

A lower-priced VLSFO stem fixed at $592/mt in Rotterdam on Friday has added downward pressure on the port’s benchmark. Rotterdam's LSMGO price has held steady over the weekend, despite two higher-priced LSMGO stems booked at $751/mt and $756/mt on Friday.

Gibraltar's LSMGO price has shed $9/mt over the weekend, narrowing the port's LSMGO premium over Rotterdam's by $9/mt to $89/mt now. Availability of all grades is normal in Gibraltar, however, securing prompt deliveries may be difficult. Traders recommend lead times of 4-6 days in the port. Wind gusts of up to 24 knots are forecast to hit Gibraltar Strait tomorrow, which may impact bunkering in the ports there.

Availability is good in the South African port of Durban, with non-prompt delivery dates available. Lead times of 7-10 days are advised by traders for VLSFO and LSMGO grades in Durban.

Brent

The front-month ICE Brent contract lost $0.17/bbl on the day from Friday, to trade at $88.95/bbl at 09.00 GMT.

Upward pressure:

Reports that Israel is ramping up plans for further ground and air assaults on southern Gaza’s Rafah region and the ongoing concerns about Ukraine’s attacks on Russia’s oil infrastructure have continued to support Brent’s price. 

“Tensions in the Middle East remain elevated despite tit-for-tat attacks between Israel and Iran not leading to any escalation in the Israel-Hamas war,” Saxo Bank’s head of FX strategy Charu Chanana said. “Supply risks are also emerging as Russia and Ukraine target each other’s energy infrastructure,” she added.

Downward pressure:

Brent futures lost upward momentum after the US Federal Reserve’s (Fed) chair Jerome Powell “expressed concerns” about persistent inflation in the world’s largest oil consuming nation, market analysts said.

Powell also emphasised that interest rate cuts “would be on hold until the Fed gains greater confidence in inflation moving sustainably toward the 2 percent target,” SPI Asset Management’s managing partner Stephen Innes said.

Members of the US central bank are scheduled to convene over the next two days to discuss interest rate cuts at the Federal Open Market Committee (FOMC) meeting.

“The [oil] market has virtually priced in a more hawkish Fed scenario; other than removing all cuts from the dot plot, it’s unlikely the Fed will hawkishly surprise the market,” Innes added.

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

By Manjula Nair and Aparupa Mazumder

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