Bunker prices in East of Suez ports are generally up with Brent, and VLSFO is much more readily available in Fujairah than in Singapore.

IMAGE: Fuel oil inventories are at multi-year lows in Fujairah. Port of Fujairah

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

• VLSFO prices up in Fujairah ($8/mt) and Singapore ($6/mt), and down in Zhoushan ($2/mt)
• LSMGO prices up in Fujairah ($16/mt), Zhoushan ($14/mt) and Singapore ($12/mt)
• HSFO prices up in Fujairah ($14/mt), Zhoushan ($6/mt) and Singapore ($4/mt)

Fujairah’s VLSFO premium over Singapore has widened by $2/mt to $5/mt.

Brent has supported both ports’ VLSFO benchmarks in the past day. Singapore’s benchmark has come under some downward counterpressure from two lower-priced 500-1,500 mt stems with deliveries in more than seven days.

VLSFO continues to be tight for prompt deliveries in Singapore. The earliest expected delivery dates vary greatly between suppliers, from a week out to 3-4 weeks.

Meanwhile, in nearby Port Klang, VLSFO can be delivered prompt and its benchmark price is currently $12/mt lower than Singapore’s.

VLSFO availability is also relatively better in Fujairah than in Singapore. Four days of lead time is recommended for VLSFO in Fujairah, but suppliers can be hesitant to offer larger VLSFO stems after a period of limited incoming cargo replenishments. The UAE port’s fuel oil stocks are at multi-year lows.

In the HSFO market, Zhoushan continues to be outpriced by Singapore and Fujairah, which offer the grade $55-59/mt lower. Zhoushan’s Hi5 spread of $17/mt is much narrower than the other two ports’ $60-69/mt.

Brent

The front-month ICE Brent contract has pushed $1.26/bbl higher on the day, to trade at $62.39/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

The American Petroleum Institute (API) has estimated a 2.98 million-bbl draw in US crude stocks over the past week, which could mark the first decline, after two consecutive weeks of builds. The official US Energy Information Administration (EIA) data is expected later today.

Trump has said he expects to reach a “great deal” with China when he meets President Xi Jinping later this month, according to CNBC. “It’s going to be a great trade deal. It’s going to be fantastic for both countries, and it’s going to be fantastic for the entire world,” CNBC quoted him as saying.

“Trump’s trade negotiation comments are likely providing some support to the market,” ING’s head of commodity strategy, Warren Patterson said.

“Further support is likely coming from the cancellation of the Trump-Putin summit, which erodes hopes for a Russia-Ukraine peace deal,” Patterson added.

Downward pressure:

On the flip side, lingering concerns of an oversupplied market could temper optimism.

A US licensing update has allowed Venezuela to resume crude exports to the US “following a five-month pause,” commodities research firm Energy Aspects said. Reuters reported in August that Chevron had been granted a “restricted license” by the US Treasury Department to operate in Venezuela.

“The prompt Brent discount to the six-month contract has widened sharply, reflecting a growing belief that OPEC+ output increases and rising non-OPEC supply will keep the market well stocked through the winter,” Ole Hanson, head of commodity strategy at Saxo Bank said.

“With Brent stuck below USD 65, speculative sentiment remains fragile. Managed money accounts have been reducing long exposure in recent weeks while adding to gross shorts, betting on further downside as inventories build and the curve softens,” Hanson added.

By Erik Hoffmann and Konica Bhatt

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