Prices in East of Suez ports have moved up, and several South Korean ports brace for weather disruptions.

Changes on the day, to 17.00 SGT (09.00 GMT) today:

• VLSFO prices up in Singapore ($20/mt), Fujairah ($16/mt) and Zhoushan ($11/mt)
• LSMGO prices up in Fujairah ($18/mt), Singapore ($15/mt) and Zhoushan ($11/mt)
• HSFO prices up in Fujairah ($13/mt), Singapore and Zhoushan ($10/mt)
• B24-VLSFO at a $194/mt premium over VLSFO in Singapore
• B24-VLSFO at a $221/mt premium over VLSFO in Fujairah

Singapore’s VLSFO price has increased by $20/mt over the past day — the sharpest rise among the three major Asian bunker ports. The price rise has been supported by a higher-priced 150–500 mt VLSFO stem fixed recently at the port. Singapore's VLSFO now holds a premium of $19/mt over Zhoushan and $14/mt over Fujairah.

Bunker availability in Singapore has improved this week amid subdued demand. VLSFO lead times have shortened from 9–17 days last week to 6–13 days currently. HSFO lead times have also declined to around 5–9 days, while LSMGO lead times have been revised down from 3–10 days to 3–7 days now.

In contrast, South Korea’s Busan continues to price its VLSFO at a $10/mt premium over Singapore.

Lead times for all fuel grades across several South Korean ports have increased, now ranging between 4–11 days, up from last week’s 3–8 days.

Bunker operations in Ulsan, Onsan, Busan, Daesan, Taean and Yeosu are likely to face intermittent disruptions due to high waves and strong winds expected between 17–22 May.

Brent

The front-month ICE Brent contract has moved $0.59/bbl higher on the day, to trade at $64.25/bbl at 17.00 SGT (09.00 GMT).

Upward pressure:

Brent's price has gained upward momentum as some concerns about the weakness in the US economy have eased.

The US inflation rate, based on the Consumer Price Index (CPI), increased to 2.3% last month year-on-year, down from the 2.4% growth seen in March, according to the US Bureau of Labor Statistics (BLS). 

The data has left room for interest rate cuts by the US Federal Reserve (Fed) this year, according to analysts. “The market isn’t leaning aggressively into [interest rate] cuts yet, but the door is clearly open,” SPI Asset Management managing partner Stephen Innes noted.

Lower interest rates in the US can boost demand, making dollar-denominated commodities like oil cheaper for holders of other currencies.

Besides, the US dollar has weakened over the past day, providing some support to Brent’s price. “The dollar kicked off the week with a bounce… but the momentum didn’t last,” Innes added.

A weaker greenback can make commodities like oil more affordable for non-dollar holders, ultimately boosting oil demand in the global market. 

Downward pressure:

Brent’s price gains have been capped following US President Donald Trump's remarks on the US-Iran nuclear talks. Trump said on Thursday that Washington and Iran were very close to signing an agreement to halt the latter’s nuclear activities.

Tehran has “sort of” agreed to the terms, Trump said during the press brief on Thursday. “We're in very serious negotiations with Iran for long-term peace.”

If finalised, the deal could see the US lifting sanctions on Iranian oil. The move could add more Iranian crude to an already saturated global oil market and push prices lower, according to market analysts.

The weekly official US oil stocks figure from the US Energy Information Administration (EIA) showed an increase of 3.5 million bbls in commercial crude stocks, to touch 442 million bbls for the week ending 9 May.

“Oil prices did get a little pressure with a surprise build in crude oil inventories as reported by the Energy Information Administration (EIA),” Price Futures Group’s senior market analyst Phil Flynn said.

By Tuhin Roy and Aparupa Mazumder

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