Bunker benchmarks in European and African ports have mostly gained, and LSMGO supply is running dry in Durban. 

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($11/mt), Rotterdam ($8/mt) and Gibraltar ($6/mt)
• LSMGO prices up in Gibraltar ($8/mt) and Durban ($7/mt), and down in Rotterdam ($3/mt) 
• HSFO prices up in Gibraltar ($4/mt), and down Rotterdam ($5/mt)
• Rotterdam’s B30-VLSFO was indicated at a $222/mt premium over its VLSFO

Rotterdam’s HSFO price has resisted Brent’s upward pull and fell by a modest $5/mt, while its VLSFO price has gained in the past day. These diverging price moves have widened Rotterdam’s Hi5 spread from $47/mt yesterday to $57/mt now.

Product loading delays continue to stretch delivery lead times for bunker grades in the port, a source told ENGINE. 

A lower-priced stem booked in Germany's Hamburg port for non-prompt delivery in the past day has flipped Hamburg’s VLSFO premium over Rotterdam to a $25/mt discount now. Availability of all three grades is good in Hamburg, with lead times of 3–4 days recommended by traders. 

Bunkering is proceeding smoothly in Ceuta port, where 10 vessels are due to arrive for bunkers today, up from five yesterday, said shipping agent Jose Salama & Co. 

Meanwhile, LSMGO is currently running dry in the South African port of Durban, a trader told ENGINE. The grade has been in short supply over the past few months. It is unclear when suppliers will receive replenishment cargoes, the trader added.

Brent

The front-month ICE Brent contract has inched $0.09/bbl higher on the day, to trade at $74.34/bbl at 09.00 GMT.

Upward pressure:

Brent crude’s price moved higher after the American Petroleum Institute (API) reported that crude oil inventories in the US declined by 1.58 million bbls in the week that ended 11 October, according to the API estimates.

A drop in US crude stocks indicates a growth in oil demand, which can put upward pressure on Brent’s price. “A constructive report by the American Petroleum Institute (API) supports sentiments in the immediate term,” two analysts from ING Bank noted.

The Middle East conflict has also supported Brent’s price gains, following another Israeli airstrike on southern Lebanon on Wednesday, which killed 16 people including the mayor, Reuters reported.

The airstrike came “despite Lebanon saying it had received some form of guarantee from the US that Israel will ease its offense,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

According to another CNN report, Israeli Prime Minister Benjamin Netanyahu’s cabinet has prepared a plan for a retaliatory strike on Iran, which could happen before the US election on 5 November.

“This [news] raised concerns that US influence over Israeli tactics remains weak, bringing into question the US calls for Israel not to target Iran’s oil facilities in any retaliatory attack,” Hynes said.

Downward pressure:

Concerns over demand growth from China have kept Brent's price gains in check. The country imported 11.07 million b/d of crude oil in September, down from 11.56 million b/d imported in August.

The drop in China's crude imports indicates a slowdown in oil demand growth in the world’s second-largest crude oil-consuming nation. “Crude oil remains rangebound as demand worries, especially in China, a country at the forefront of electrification,” analysts from Saxo Bank said.

Meanwhile, monthly oil market outlooks from oil producers’ group OPEC and energy agency IEA released this week indicated “sluggish [oil] demand” for the next year, ING Bank’s analysts said, keeping pressure on oil prices.

In its October market outlook, the Organisation of the Petroleum Exporting Countries (OPEC) lowered its global oil demand growth forecast to 1.9 million b/d, with total consumption expected to average 104.1 million b/d in 2024. This is about 106,000 b/d lower than its demand growth forecast made in September.

By Manjula Nair and Aparupa Mazumder

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