Bunkerworld Index: Prices rise amid firming crude, pockets of tightness for bunkers
31st December 2020 11:40 GMT

The S&P Global Platts Bunkerworld Index continued to rise amid continuing optimism in the wider oil complex and mixed market dynamics in bunker markets.

The BW0.5%S Index ended Dec. 30 at $418/mt, up $4/mt day on day, up $12/mt month on the week and $37/mt higher than 30 days previously.

The BW380 Index, which represents value for 3.5% sulfur fuel oil, rose $2/mt on the day to $333.50/mt, increasing $7.50/mt on the week and $18.50/mt on the month.

In crude markets, US commercial crude oil inventories declined 6.06 million barrels to 493.47 million barrels during the week ended Dec. 25, US Energy Information Administration data showed Dec. 30. The draw comes as exports surged nearly 17% on the week to a 3.63 million b/d, the highest since the week ended March 20.

There has also been firming sentiment in Europe, with North Sea grades seeing renewed appetite from Asia.

Platts assessed the Dated Brent crude benchmark at $51.21/b Dec. 30, up 8 cents/b day on day, up 39 cents/b on the week, and $3.75/b higher than Nov. 30.

A recovery in commodities demand will pull drybulk imports higher in 2021, S&P Global Platts Analytics predicts. The analysts expect the development of vaccines and improving pandemic management will see economies recover next year. Chinese infrastructure and capital spending are expected to be flat year on year in 2021, so most of the global growth will be from recovery in other markets, Platts Analytics said.

Supply of 0.5%S FO in South Korea is expected to remain short going into the first quarter next year as refiners plan to continue minimizing run rates on poor crack margins across all products. Demand has tapered off as most buyers already met their requirements ahead of the year-end holidays.

Availability of 180 CST 3.5%S FO in Durban, South Africa, is expected to remain tight for the coming weeks following an explosion at one of refineries in the area. Owned by Engen, the facility has been shut amid ongoing investigations into the fire following an explosion at the refinery on Dec. 4. Engen is the country's second-largest refinery.

In the US Gulf Coast market, spot demand could pick up in the wake of seasonal end-of-year “sell-offs” that usually happen as a result of suppliers looking to destock and avoid inventory taxes. Spot bunker markets in the wider region enter the new year having seen liquidity dry up during recent holiday-shortened weeks, with some market players saying demand and activity should pick up in January.

The BW Indexes are weighted daily indexes made up of assessments at 20 key bunkering ports. To obtain a representative geographical spread, the ports were selected by size with reference to their geographical importance.

The BW0.5%S Index ports are Hong Kong, South Korea, Shanghai, Singapore, Japan, Las Palmas, Durban, Fujairah, Gibraltar, Piraeus, Rotterdam, St Petersburg, Houston, Los Angeles, New York, Balboa and Santos.

The BW380 Index ports are Busan, Canary Islands, Colombo, Durban, Fujairah, Gibraltar, Hong Kong, Houston, Los Angeles, New York, Offshore Nigeria, Panama Canal, Piraeus, Rotterdam, Santos, Shanghai, Singapore, St Petersburg, Suez and Tokyo.

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Bunkerworld .,
31st December 2020 11:40 GMT