Bunker benchmarks in European and African ports have moved in mixed directions, and Rotterdam’s Hi5 spread has widened. 

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) and Rotterdam ($12/mt), and down in Gibraltar ($3/mt)  
• LSMGO prices up in Durban ($30/mt) and Gibraltar ($24/mt), and down in Rotterdam ($2/mt)  
• HSFO prices up in Gibraltar ($11/mt), and down in Rotterdam ($13/mt) 

Rotterdam’s VLSFO price has gained in the past day, while its HSFO price has fallen steeply. These diverging price moves have significantly widened Rotterdam’s Hi5 spread from $79/mt yesterday to $104/mt today. 

Gibraltar's LSMGO premium over Rotterdam has widened by $26/mt to $85/mt now. Bunkering is proceeding smoothly in Gibraltar, with seven vessels waiting for bunkers today, up from two yesterday, a source said. In the nearby Ceuta port, nine vessels are due to arrive for bunkers today, up from eight yesterday, said shipping agent Jose Salama & Co. A supplier is experiencing 3–4 hours of delay at one of the terminals in Ceuta today.

In Las Palmas, a lower-priced prompt LSMGO stem was fixed at $735/mt for 150-500 mt yesterday. This has put some downward pressure on the benchmark, which has fallen by $19/mt. The price drop has narrowed Las Palmas’ LSMGO premium over Gibraltar by $43/mt, to just $4/mt now.

Brent

The front-month ICE Brent contract has moved $0.23/bbl lower on the day, to trade at $76.98/bbl at 17.00 SGT (09.00 GMT).

Upward pressure:

Brent’s price found some support from escalating tensions in the Red Sea, which have fueled concerns in the global oil market about potential supply disruptions.  

On Monday, Iran-aligned Houthi forces launched two anti-ship ballistic missiles (ASBM) at two crude oil tankers transiting the Red Sea, the US Central Command (CENTCOM) said.

Both vessels carrying crude oil were hit by the missiles, CENTCOM said.

Besides, oilfield closures and export bans in Libya have also supported Brent’s price today.

Libya’s state-owned oil company National Oil Corporation (NOC) confirmed oilfield closures in the country last week. On Monday, it declared force majeure on the El Feel oilfield, one of the biggest oilfields in Libya.

“[Brent] Crude oil gained as supply disruptions in Libya worsen,” ANZ Bank’s senior commodities strategist Daniel Hynes said. The El Feel crude oilfield has a capacity of 70,000 b/d, Reuters reports.

Downward pressure:

Brent’s price declined as demand growth concerns from the world’s second-largest oil consumer, China, continued to temper market sentiment.

China’s manufacturing activity slumped in August, with the country's manufacturing Purchasing Manager’s Index (PMI), a key economic indicator to understand demand growth, coming in at 49.1.

“Demand was also in focus following more weak economic data in China. Factory activity contracted for a fourth consecutive month in August,” Hynes added.

A PMI reading below 50 indicates a decline in the country’s economic health. It can also dampen the demand growth for commodities like oil.

“Crude oil prices are again struggling as the outlook for global demand turns increasingly bleak,” SPI Asset Management’s managing partner Stephen Innes remarked. “The risks are skewed to the downside, particularly with China—the world’s second-largest consumer and a key driver of global oil demand growth—stuck in an economic funk,” he added.

By Manjula Nair and Aparupa Mazumder

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