Regional bunker benchmarks have tracked Brent’s upward movement, and securing prompt supply of HSFO can be slightly difficult in Rotterdam. 

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Rotterdam and Gibraltar ($3/mt) and Durban ($2/mt)   
• LSMGO prices up in Rotterdam ($5/mt) and Gibraltar ($3/mt)
• HSFO prices up in Rotterdam ($7/mt), and unchanged in Gibraltar
• Rotterdam B30-VLSFO at a $185/mt premium over VLSFO

Bunker prices across all grades have risen in Rotterdam. HSFO supply is a bit tight for prompt delivery in the port and in the wider ARA hub, with recommended lead times of 5-7 days. Availability of VLSFO and LSMGO grades remains normal with lead times of 3-5 days. 

Energy consultancy IIR reported earlier this week that BP is expected to soon restart a 200,000 b/d crude distillation unit at its 400,000 b/d capacity Rotterdam refinery, following an unplanned outage on 10 December. This could improve bunker fuel supply in the region.

VLSFO and LSMGO prices have increased some in Gibraltar, while its HSFO price has held steady. The port is experiencing calmer weather conditions today, after facing strong wind gusts on Monday and Tuesday. The backlog of vessels waiting to bunker in Gibraltar has been reduced to 15 vessels today, down from 24 vessels yesterday, according to a source.

Las Palmas' VLSFO price has come down by $7/mt, while its HSFO has held steady. The price moves have narrowed the Hi5 spread in Las Palmas from $40/mt, to $34/mt now. A lower-priced non-prompt VLSFO stem booked at $542/mt in the past day has contributed to drag the benchmark down.

Brent

The front-month ICE Brent contract has moved $0.39/bbl higher on the day, to trade at $73.67/bbl at 09.00 GMT.

Upward pressure:

Brent’s price moved higher as the global oil market shifted its focus on today’s Federal Open Market Committee (FOMC) meeting, where the US Federal Reserve (Fed) is expected to announce another interest rate cut before the year ends.

Market analysts expect the US Fed to cut interest rates by another 25 basis points. Lower interest rates in the US can make dollar-denominated commodities like oil more affordable for holders of other currencies.

“Today's highly anticipated FOMC meeting has traders on edge, with markets already factoring in a 25bps [25 basis points] rate cut by the Federal Reserve,” SPI Asset Management’s managing partner Stephen Innes said.

The inflation rate in the US, measured by the change in the Consumer Price Index (CPI), rose to 0.3% in November, inching up from a 0.2% growth recorded in the previous month, the US Labor Department's Bureau of Labor Statistics (BLS) reported.

This has left room for one last rate cut in 2024 by the US central bank, analysts said. “This [rate cut] expectation stems from the latest inflation data, where November's CPI aligned with forecasts, showing no unexpected spikes,” Innes said.

Downward pressure:

Brent futures felt some downward pressure due to concerns about weak oil demand growth in China.

China’s National Bureau of Statistics (NBS) reported that the country’s retail sales growth came in weaker than unexpected in November, rising only by 3% year-on-year, and noting a sharp drop from the 4.8% growth achieved in October.

“Continued concerns about the demand outlook in China have otherwise been the [oil market’s] focus this week,” analysts from Saxo Bank said.

By Shilpa Sharma and Aparupa Mazumder

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