Regional bunker benchmarks have mostly fallen in the past day, and Rotterdam’s HSFO price is trading at a narrow $15/mt discount to Gibraltar's. 

PHOTO: A large container ship docked in Rotterdam. Getty Images

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($35/mt), and down in Gibraltar ($10/mt) and Rotterdam ($5/mt) 
• LSMGO prices down in Durban ($28/mt), Gibraltar ($10/mt) and Rotterdam ($8/mt)
• HSFO prices up in Rotterdam ($25/mt), and down in Gibraltar ($11/mt)

Rotterdam’s HSFO price has increased sharply in the past day. A higher-priced stem fixed at $543/mt for 150–500 mt and booked for prompt delivery in the past day has pushed the benchmark higher. Prompt availability of HSFO is tight in Rotterdam and in the wider ARA hub. Lead times of 5-7 days are generally recommended for the grade.

Delays in the arrival of HSFO replenishment cargoes have led to supply pressure, sources say.

Unlike Rotterdam, Gibraltar’s HSFO price has declined by $11/mt in the past day. The diverging price moves have narrowed Rotterdam’s HSFO discount to Gibraltar's by $36/mt to just $15/mt now — the lowest since January. 

The Gibraltar port authority has extended its fog warning till late afternoon today. The thick fog is expected to impact visibility in the port area and may hamper bunkering in Gibraltar. Two vessels are waiting for bunkers in the port today, slightly down from three yesterday, according to a source. Availability of all three bunker grades is good for prompt delivery dates in Gibraltar, with a trader advising lead times of 3-5 days for optimal coverage from suppliers. 

Bunkering is proceeding smoothly in nearby Ceuta, where bunker fuel availability is also normal, shipping agent Jose Salama & Co. told ENGINE. Ten vessels are due to arrive for bunkers in Ceuta today, up from six yesterday, the shipping agent said.

Brent

The front-month ICE Brent contract has lost $0.92/bbl on the day, to trade at $81.63/bbl at 09.00 GMT.

Upward pressure:

Crude oil inventories in the US dropped by 3.9 million bbls in the week that ended 19 July, according to estimates from the American Petroleum Institute (API). The API's estimate of a crude stock drawdown has lent some support to Brent.

A draw in US crude stocks indicates oil demand growth and could push oil prices higher. The US trade body reported “sizeable across-the-board oil inventory draws,” VANDA Insights’ founder and analyst Vandana Hari said.

Oil supply risks from wildfires in Canada's Alberta province have continued to exert upward pressure on Brent’s price, according to market analysts. Oil producers, including Suncor Energy and Altair Energy, have halted production due to operational disruptions caused by wildfires, Bloomberg reported.

“While wildfires have already forced some producers to curtail production, these fires still threaten a large amount of supply,” two analysts from ING Bank said.

The oil market will closely monitor Saudi Arabia-led OPEC's upcoming meeting on 1 August, as the organisation is expected to discuss strategies to increase prices, according to reports.

Downward pressure:

A weak economic outlook in China has raised concerns about oil demand growth in the country. This has contributed to pull Brent's price lower, according to analysts.

China reported its “weakest economic growth in five quarters last week, putting a damper on the outlook [for oil], ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Economic activity in the world’s second-largest oil consumer declined in the second quarter. China's GDP growth dropped from 5.3% in the first quarter to 4.7% in the second quarter.

Ceasefire talks between Israel and Hamas have shown progress after Israeli Prime Minister Benjamin Netanyahu signaled that a deal could be cracked to end the nine-month-old conflict in the Gaza Strip.

Netanyahu is currently visiting Washington, where he will address the US Congress, the Associated Press (AP) reports. The US, along with Egypt and Qatar, are proactively endorsing a phase-out plan that would stop Israel’s military operations in Gaza and free the remaining Israeli hostages. This could ease concerns over supply disruptions in the Middle East.

“Brent crude fell… hitting its lowest levels in over a month due to renewed Israel-Hamas ceasefire talks and demand concerns,” analysts from Saxo Bank said.

By Manjula Nair and Aparupa Mazumder

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