Regional bunker benchmarks have mostly declined with Brent, and prompt LSMGO supply is tight in the ARA. 

Changes on the day to 09.00 GMT today:

• VLSFO prices down in Durban ($29/mt), Gibraltar ($15/mt) and Rotterdam ($9/mt)  
• LSMGO prices up in Gibraltar ($16/mt) and Durban ($8/mt), and down in Rotterdam ($2/mt)  
• HSFO prices down in Gibraltar ($8/mt) and Rotterdam ($1/mt)
• Rotterdam B30-VLSFO at a $205/mt premium over VLSFO

LSMGO availability in Rotterdam and across the wider ARA hub is very tight for prompt delivery dates, a trader told ENGINE. LSMGO tightness is likely to continue till mid-November, another source said, adding that this tightness is mainly due to maintenance work at one of the refineries. HSFO availability is tight in the ARA hub with lead times of 7–10 days recommended. VLSFO availability is also tight with lead times of 5–7 days advised by traders. 

Gibraltar’s LSMGO price has increased the most in the past day, while Rotterdam’s LSMGO has come down. These diverging price moves have widened Gibraltar’s LSMGO price premium over Rotterdam by $18/mt to $81/mt now. Gibraltar’s VLSFO price has declined by a sharp $15/mt, narrowing the port’s Hi5 spread from $15/mt to $8/mt now. Gibraltar is likely to face bad weather over the weekend, which could cause bunkering delays and stretch lead times there, a trader said.

Securing prompt stems is not a challenge in the Greek port of Piraeus. The port has ample availability across all grades with lead times of 3-4 days advised. Demand has been mostly negligible in Piraeus, a trader said.

Brent

The front-month ICE Brent contract inched $0.05/bbl lower on the day, to trade at $71.74/bbl at 09.00 GMT.

Upward pressure:

Oil prices gained some upward momentum after the American Petroleum Institute (API) reported an unexpected decline of 573,000 bbls in US crude stocks in the week that ended 25 October.

A drop in US crude stocks indicates growth in oil demand, which can put upward pressure on Brent’s price.

Additionally, oil market traders and analysts are bracing for the US elections on 5 November. A change in the US government could impact economic policies in the world's top oil-consuming nation, which could have several implications for oil.

However, according to SPI Asset Management’s managing partner Stephen Innes, “the US labour market is stabilising, potentially giving the Fed more confidence to proceed with rate cuts—even as election-related uncertainties loom.”

Lower interest rates in the US can further boost demand growth for dollar-denominated commodities like oil as it makes the greenback weaker against other currencies.

Downward pressure:

Brent’s price moved lower as Israel's latest attack on Iran was not directed toward the country's oil facilities.

Israel launched over 100 missiles into Iran on Saturday, but none were directed toward the latter’s energy or nuclear facilities. As a result, supply-related concerns in the global oil market have eased, capping Brent’s price gains.

Oil moved lower due to “a deflation of Mideast risk premium on easing Israel-Iran tensions,” VANDA Insights’ founder and analyst Vandana Hari said.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu revealed plans to hold a diplomatic meeting this week to resolve the conflict in Lebanon, Reuters reported. This news has added some downward pressure on Brent’s price.

“The prospect of a ceasefire in Gaza and the apparent de-escalation of tensions across the broader Middle East has seen the market almost completely remove the geopolitical risk premium it had priced into the [oil] market last week,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

By Manjula Nair and Aparupa Mazumder

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