Bunker benchmarks in key Americas ports have tracked Brent’s downward movement, and the Houston Ship Channel is closed due to rough weather conditions.

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

• VLSFO prices down in Houston ($33/mt), Zona Comun ($17/mt), Balboa ($12/mt), Los Angeles ($11/mt) and New York ($10/mt)
• LSMGO prices down in Houston ($18/mt), New York ($12/mt), Los Angeles and Balboa ($10/mt)
• HSFO prices down in Balboa ($16/mt), New York ($11/mt) and Houston ($9/mt)

Regional bunker fuel prices have moved lower in the past day, with VLSFO prices noting the steepest drop in Houston. A lower-priced 500-1,500 mt VLSFO stem fixed in Houston at $579/mt for prompt delivery dragged the benchmark lower.

The Artic Front has disrupted bunker operations around US Gulf Coast ports. Rough weather conditions have forced the Houston Ship Channel to remain closed at this time, according to a source. “Barges are currently not moving,” due to decks freezing over, the source says, adding that pumping rates will be slower than normal due to cold temperatures through 22 January.

High wind gusts have suspended bunker deliveries in the Galveston Offshore Lightering Area (GOLA), according to another source. “Continued shut down expected through 22nd late morning,” the source adds.

VLSFO price has also fallen in Los Angeles. Despite the decline, suppliers in the port currently price VLSFO at premiums of $86/mt and $67/mt over Houston and New York, respectively. Prompt availability of VLSFO and LSMGO in the port is good, with projected lead times of less than seven days for both grades, a source says.

Brent

The front-month ICE Brent contract has shed $0.98/bbl on the day, to trade at $79.72/bbl at 07.00 CST (13.00 GMT).

Upward pressure:

Oil prices have found some support from the latest positions data, as money managers and hedge funds increased their net-long bets on ICE Brent futures over the last reporting week, driven by fresh buying in the global oil market.

Speculators bought about 27,000 lots as of last Tuesday to leave them with net-long positions in Brent futures of 254,000 lots, according to futures and options data from ICE Futures Europe.

The surge in buying came amid growing supply-related concerns from Russia, following stricter US sanctions against the country’s energy sector.

“Investors have built the most bullish position in petroleum for nearly nine months, anticipating US sanctions will reduce exports from Russia and Iran and cause inventories to deplete even faster,” independent market analyst John Kemp remarked.

When speculators boost their net-long positions, oil prices typically rise. Conversely, when they reduce these positions, prices tend to decline, leading to a cycle where their actions can influence the market and oil prices.

Downward pressure:

Brent’s price has shed nearly $1/bbl following Donald Trump’s inaugural speech as the 47th US President. His speech has reassured oil investors of a US oil supply influx this year.

“Crude oil fell as Trump promised to boost US crude production. He reiterated his goal to encourage more output by cutting red tape and allowing drilling on previously banned federal lands,” ANZ Bank senior commodity strategist Daniel Hynes said.

Potential US tariffs on Canada and Mexico could reduce some supply to the US. However, incentives aimed at increasing domestic US production will help offset these concerns, according to market analysts.

“Donald Trump signed a flurry of executive orders hours after taking oath as US President on Monday. Nearly all the measures that are directly or indirectly material for the oil markets are slow-burn and may prompt a knee-jerk reaction in crude futures,” VANDA Insights’ founder and analyst Vandana Hari remarked.

By Aparupa Mazumder

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