Prices in East of Suez ports have moved up, and bunkering operations remain suspended in China’s Zhoushan and Shanghai due to Typhoon Gaemi.

PHOTO: Aerial view of deepwater port with cargo ships and containers in Shanghai. Getty Images

Changes on the day to 17.00 SGT (09.00 GMT) today:

• VLSFO prices up in Zhoushan ($37/mt), Fujairah ($14/mt) and Singapore ($8/mt)
• LSMGO prices up in Fujairah ($29/mt), Zhoushan ($6/mt) and Singapore ($4/mt)
• HSFO prices up in Singapore ($13/mt), Fujairah ($11/mt) and Zhoushan ($8/mt)

Bunker benchmarks in East of Suez ports have tracked Brent's rise. Zhoushan's VLSFO price has surged by $37/mt, the steepest rise among the three major Asian bunker ports, driven by a higher-priced VLSFO stem fixed in Zhoushan. As a result, Zhoushan's VLSFO price has flipped to a $20/mt premium over Singapore from a $9/mt discount yesterday. Zhoushan's VLSFO price is at a premium of $25/mt over Fujairah.

VLSFO and LSMGO grades are readily available in Zhoushan, with suppliers recommending lead times of 5-7 days. HSFO availability has improved, with lead times decreasing from 7-10 days last week, to 5-7 days now.

However, bunkering operations in Zhoushan remain suspended since Monday due to Typhoon Gaemi. Most suppliers expect to resume bunker deliveries from 29 July, when calmer weather is forecast. Bunkering in Shanghai has also been suspended since yesterday, with most suppliers not offering deliveries before Tuesday.

Fujairah's LSMGO price has climbed by $29/mt, influenced by a higher-priced LSMGO stem fixed in the past day. Fujairah's LSMGO premiums over Singapore and Zhoushan are $97/mt and $36/mt, respectively.

Prompt availability of all grades remains tight in Fujairah, with most suppliers recommending lead times of 7-10 days, consistent with last week.

Brent

The front-month ICE Brent contract moved $1.35/bbl higher on the day, to trade at $82.22/bbl at 17.00 SGT (09.00 GMT).

Upward pressure:

Brent moved higher after the OPEC Secretariat confirmed that Russia, Iraq, and Kazakhstan submitted compensation plans for producing above their crude oil quotas in the first half of 2024. These countries will balance their excess production over the next 15 months, concluding in September 2025.

Commercial crude oil inventories in the US decreased by 3.74 million barrels to 436 million barrels in the week ending July 19. The decline in stocks occurred amid an increase in US crude oil exports, which rose by 222,000 barrels per day to 4.19 million barrels per day that week. This has put upward pressure on the Brent price.

Canadian wildfires are threatening oil production, contributing to rising prices. Imperial Oil has reduced non-essential staff at its Kearl oil sands site near Fort McMurray as a precaution. Earlier this month, Suncor temporarily cut production and evacuated non-essential workers from its Firebag site due to a nearby fire. With two-thirds of Canada’s five million barrels per day production coming from the oil sands, analysts are increasingly concerned about significant production cuts due to the worsening wildfire situation.

“While wildfires have already forced some producers to curtail production, these fires still threaten a large amount of supply,” Reuters quoted ING Group analysts.

Downward pressure:

Expectations of a Gaza ceasefire deal, which could ease Middle East tensions and alleviate supply concerns, have put downward pressure on the Brent crude price.

US Vice President Kamala Harris has urged Israeli Prime Minister Benjamin Netanyahu to assist in reaching a ceasefire, taking a firmer stance than President Joe Biden.

Additionally, concern about oil demand in China has further dragged the benchmark down. China's apparent oil demand fell by 8.1% year-on-year to 13.66 million b/d in June, according to ANZ Research analysts.

By Tuhin Roy

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