Regional bunker benchmarks have tracked Brent’s upward movement, and LSMGO demand is strong in Rotterdam.

Changes on the day to 09.00 GMT today:

• VLSFO prices up in Durban ($18/mt), Gibraltar ($9/mt) and Rotterdam ($7/mt)  
• LSMGO prices up in Rotterdam ($12/mt) and Gibraltar ($11/mt)
• HSFO prices up in Gibraltar ($8/mt) and Rotterdam ($2/mt)
• Rotterdam B30-VLSFO at a $182/mt premium over VLSFO

Rotterdam’s LSMGO price has witnessed a sharp increase in the past day. LSMGO demand has increased in the ARA, according to a source. Availability of the grade is said to be good, with several suppliers offering prompt deliveries.

Rotterdam’s HSFO price has mostly held steady in the past day, while the port’s VLSFO price has increased some. These price moves have widened Rotterdam’s Hi5 spread to around $73/mt now. 

Gibraltar’s HSFO price has increased by $8/mt in the past day, widening Gibraltar’s HSFO premium over Rotterdam by $6/mt to $48/mt now. Rough weather may impact bunkering in Gibraltar today and continue into tomorrow, with strong wind gusts of up to 23 knots forecast in the port area.    

Ten vessels are due to arrive for bunkers in Ceuta today, unchanged from yesterday, said shipping agent Jose Salama & Co. Two vessels are waiting for berthing at one of the supplier terminals. One of the suppliers is experiencing delays of around eight hours, the shipping agent said. 

Brent

The front-month ICE Brent contract has moved $1.91/bbl higher on the day, to trade at $77.84/bbl at 09.00 GMT.

Upward pressure:

Brent’s price found a strong upward thrust from positive US data that have supported demand growth expectations in the oil market.

Crude oil inventories in the US dropped by 4.0 million bbls in the week that ended 3 January, according to the American Petroleum Institute (API) estimates. A drop in US crude stocks indicates a growth in oil demand, which can support Brent's price.

Oil gained more support due to fresh supply concerns in eastern Europe after a Ukrainian drone struck a Russian oil depot yesterday, Ukraine's military said on the Telegram messaging app.

While the market awaits a Russian retaliation, it is also preparing for stricter sanctions against Russian and Iranian oil firms, expected to come into action once President-elect Donald Trump takes his official oath at the White House later this month.

“Given that oil from Russia and Iran typically flows into the inventories of China's teapot refineries and other storage facilities, this [potential] reduction [of Russian and Iranian oil supply] is seen as a significant driver of the current tight supply dynamics in Asia,” SPI Asset Management’s managing partner Stephen Innes said.

Downward pressure:

President-elect Donald Trump is ready to reverse the latest presidential order banning the majority of the offshore oil and natural gas leases in the eastern Gulf of Mexico, the Pacific Ocean, as well as portions of the Northern Bering Sea in Alaska, several media reports suggested.

With just two weeks in office, the Biden administration’s ban on most new oil and gas drilling off the Pacific and Atlantic coasts aims at drastically reducing US oil and gas production.

However, global markets are already on track to brace the “drill, baby, drill” agenda in Trump’s second term as the US President.

“Throughout his 2024 presidential campaign, Trump vowed that, if elected, he would expand oil and gas drilling to bolster American-made energy,” Price Futures Group’s senior market analyst Phil Flynn said.

By Manjula Nair and Aparupa Mazumder

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