Bunkerworld Index: Prices rise as bullish crude factors offset limp demand
8th January 2021 14:11 GMT

The S&P Global Platts Bunkerworld Index displayed broadly bullish behavior as optimism in crude markets offset a prevailing weakness in buying appetite for marine fuel.

The BW0.5%S Index ended Jan. 7 at $427/mt, stable day on day but up $11/mt on the week and $34/mt higher than 30 days previously.

The BW380 Index, which represents value for 3.5% sulfur fuel oil, climbed $5.50/mt on the day to $350/mt, increasing $16.50/mt on the week and $28/mt on the month.

Crude oil futures have pushed higher on multiple bullish factors, primarily a Saudi Arabian decision to cut oil output as well as a weaker dollar that analysts say goes hand in hand with a potential fiscal stimulus after Democrats gained control of the US Senate.

Platts assessed the Dated Brent crude benchmark at $54.65/b Jan. 7, down 3 cents/b day on day but up $3.69/b since Jan. 4 and $5.56/b higher than Dec. 7.

The short-term outlook for clean tanker demand is bleak. Clean tanker freight rates are heavily linked with refinery runs and refinery downtime remains severe, Platts Analytics said Jan. 7. However, demand should improve as excess product stocks are slowly worked off, with runs also rising for 2021. In turn, freight rates should slowly climb from multi-year lows for some routes, Platts Analytics added.

After finishing the first trading week of the year, which was characterized by thin demand across the major Asian bunkering hubs of Singapore and Fujairah, traders focusing on these ports were more hopeful of demand picking up for product deliverable in the second half of January.

European marine fuel continued to search for direction at the start of the new year, after patchy demand presented a mixed picture in recent days, a pattern which is expected to repeat itself.

US Gulf Coast ports entered the second week of 2021 dealing with similar fundamentals seen to those in the second half of 2020, as limited liquidity persisted on weak demand fundamentals. Additionally, some regional suppliers were pointing to tight supply on both bulk and retail 0.5%S markets, with congestion issues also in play.

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 .,
8th January 2021 14:11 GMT