Most regional bunker benchmarks have decreased with Brent, and rough weather may hamper bunkering in Gibraltar on Wednesday. 

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

• VLSFO prices down in Gibraltar ($4/mt), and Rotterdam and Durban ($3/mt) 
• LSMGO prices unchanged in Rotterdam, and down in Durban ($12/mt) and Gibraltar ($9/mt) 
• HSFO prices up in Rotterdam ($1/mt), and down in Gibraltar ($1/mt) 

Rotterdam’s HSFO price has defied Brent’s downward pull and held steady over the weekend, while the port's VLSFO price has dipped slightly. These diverging price moves have narrowed Rotterdam’s Hi5 spread from $101/mt on Friday to $97/mt now. 

HSFO availability has improved in Rotterdam in the past week, however, prompt supply could still vary between suppliers, a trader told ENGINE. Meanwhile, HSFO supply is tight in Amsterdam, which is part of the wider ARA hub.

Rotterdam’s HSFO price discount to Skaw Offshore's HSFO has narrowed by a slight $5/mt to $114/mt now over the weekend. However, Rotterdam's HSFO discount to Skaw Offshore is still wider compared to the $73/mt noted last month.

Gibraltar is likely to face bunkering disruptions on Wednesday amid rough weather. Wind gusts of 20–27 knots are forecast near the port area, which could complicate barge deliveries there. 

VLSFO and LSMGO prices off Malta have countered Brent’s downward pull and gained some over the weekend. Two higher-priced prompt delivery stems were booked off Malta on Friday, one each for VLSFO and LSMGO, putting upward pressure on both benchmarks. This has narrowed Malta’s VLSFO discount to Gibraltar by $11/mt to just $7/mt now.

Brent

The front-month ICE Brent contract has shed $0.18/bbl on the day from Friday, to trade at $72.33/bbl at 09.00 GMT.

Upward pressure:

Brent’s price felt some upward pressure ahead of the US Federal Reserve’s (Fed) two-day Federal Open Market Committee (FOMC) meeting. A cut in key US interest rate is widely expected this week, according to market analysts.

Lower US interest rates make dollar-denominated commodities like oil more affordable for holders of other currencies, thereby supporting demand growth in the world’s largest oil-consuming nation.

“This week's Fed meeting is setting up to be one of the most eagerly awaited in recent memory,” SPI Asset Management’s managing partner Stephen Innes remarked.

The global oil market’s focus remains on Fed chairman Jerome Powell’s decision to whether cut interest rates by 25 or 50 basis points, as the latter can raise concerns of a possible recession, according to analysts. An aggressive rate cut could indicate underlying fears of an economic recession in the US, they said.

“While a cut is priced in, the uncertainty is whether we get a 25bp or 50bp [25 or 50 basis points] cut,” two analysts from ING Bank said. “A 50bp [basis points] cut could be slightly bearish for oil [prices] as it may raise recession fears,” they added.

Downward pressure:

Oil production in the US Gulf of Mexico is gradually resuming, following last week’s temporary closures due to Hurricane Francine, according to reports. This news has added some downward pressure on Brent’s price today.

“[Brent] crude oil edged lower… as operations in the Gulf of Mexico restarted as the impact of Hurricane Francine started to ease,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

On Friday, oil giant Shell announced the resumption of oil production in five offshore platforms, as the impact of the hurricane eased, according to a Reuters report. US-based oil major Chevron has deployed its staff to three offshore platforms in the US Gulf of Mexico, the report adds.

Meanwhile, demand growth concerns from China continue to drive Brent’s price lower, according to analysts. The country imported 11.56 million b/d of crude oil in August, down from 12.43 million b/d imported during the same time a year ago.

“Chinese data continues to point towards weaker domestic oil demand,” ING Bank’s analysts said.

By Manjula Nair and Aparupa Mazumder

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