Bunker prices have hit multi-month highs as crude values rally on US sanctions and cold winter weather.

Changes on the day, to 07.00 CST (13.00 GMT) today:

• VLSFO prices up in Balboa ($33/mt), New York ($23/mt), Houston ($18/mt), Los Angeles ($13/mt) and Zona Comun ($1/mt)
• LSMGO prices up in New York ($32/mt), Balboa ($31/mt), Houston ($24/mt) and Los Angeles ($16/mt)
• HSFO prices up in Los Angeles ($38/mt), Houston ($19/mt), Balboa ($16/mt) and New York ($15/mt)

VLSFO, LSMGO and HSFO prices have shot up in several ports including Balboa, where the VLSFO price has reached a three-month high. Houston’s VLSFO price has not been higher in six months.

Availability can be tight with certain suppliers in Balboa. One supplier is unable to offer HSFO and LSMGO with 7-9 days of lead time. HSFO prices have seen unusual upward pressure in Balboa recently, a trader says, and the benchmark price has not been higher in 15 months.

Bunker deliveries are suspended in the Galveston Offshore Lightering Area (GOLA), where rough seas and strong wind gusts are forecast until 14 January, and could prolong the suspension.

New York could also see bunker delays until 14 January. Tugs are on standby and may be needed.

Supply might be tightest on the West Coast, a source says, where lead times of more than seven days are recommended.

Zona Comun's VLSFO price has held broadly steady as a prompt 150-500 mt stem was fixed at a lower level.

Brent

The front-month ICE Brent contract has jumped $3.14/bbl higher on the day, to trade at a six-month high of $79.63/bbl at 07.00 CST (13.00 GMT).

Upward pressure:

Oil prices have risen, supported by cold conditions in parts of the US and Europe, which have driven up heating fuel demand.

Many areas in Europe are experiencing extreme cold and are expected to see a colder-than-usual start to the year, boosting demand, Reuters reported citing JPMorgan analysts.

“Sentiment remains positive on the back of colder weather across parts of the Northern Hemisphere, which is likely to boost oil demand,” noted two analysts from ING Bank.

Brent futures were “reinvigorated by a winter storm hitting southern US and sub-zero conditions enveloping much of northern Europe,” Vandana Hari, founder and analyst at VANDA Insights, added.

Concerns over supply disruptions due to potential tightening of sanctions on Russia and Iran have further contributed to upward pressure on prices. Supplies could face more strain as US President Joe Biden is expected to announce new sanctions targeting Russia's economy this week to support Ukraine's war effort against Moscow, Reuters reported.

Speculations about what president-elect Donald Trump’s policy on Iran will be have also influenced prices.

“Uncertainty over how hawkish Trump will be with Iran will be providing some support,” the ING Bank analysts added.

Downward pressure:

Brent futures faced some downward pressure despite a decline in commercial US crude oil stocks, due to increases in gasoline and distillate inventories.

According to the latest data from the US Energy Information Administration (EIA), gasoline stockpiles rose by 6.33 million barrels to 237 million barrels last week, while middle distillate inventories grew by 6.07 million barrels to 128 million barrels.

By Erik Hoffmann and Tuhin Roy

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