Regional bunker benchmarks have mostly dropped with Brent, and New York's LSMGO price premium over Houston widens.

Changes on the day from Friday, to 08.00 CDT (13.00 GMT) today:

• VLSFO prices unchanged in Los Angeles, and down in Balboa ($21/mt), New York ($7/mt), Houston ($4/mt) and Zona Comun ($3/mt)
• LSMGO prices up in New York ($14/mt) and Los Angeles ($5/mt), and down in Balboa ($26/mt) and Houston ($4/mt)
• HSFO prices down in Balboa ($10/mt), New York ($6/mt), Los Angeles ($5/mt) and Houston ($4/mt)

New York’s LSMGO price has defied Brent’s downward movement and gained over the weekend. One higher-priced 150-500 mt LSMGO stem fixed for prompt delivery has supported the port's benchmark gain. Meanwhile, Houston’s LSMGO price has dropped over the weekend. The diverging price moves have widened New York's LSMGO premium over Houston from $38/mt on Friday to $56/mt now.

Los Angeles’ LSMGO price has gained over the weekend, while Seattle's LSMGO price has dropped by $9/mt since Friday. This has narrowed Seattle's LSMGO premium over Los Angeles from $17/mt to just $3/mt now.

Currently, bunker operations have been running normally in Zona Comun. However, rough weather conditions are forecast from Thursday onward, which could disrupt bunkering there.

Brent

The front-month ICE Brent contract has shed $0.19/bbl on the day from Friday, to trade at $72.53/bbl at 08.00 CDT (13.00 GMT) today.

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 Debarati Bhattacharjee and Aparupa Mazumder

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