Bunkerworld Index: Rising crude supports bunker prices, but patchy demand ahead
5th February 2021 14:19 GMT

Bunker markets expect patchy supply and demand in the coming days, following recent vaccine-related increases in the wider oil complex.

The BW0.5%S Index ended Feb. 4 at $468/mt, up $4/mt on the day, up $23/mt week on week and $41/mt higher than 30 days previously.

The BW380 Index, which represents value for 3.5% sulfur fuel oil, ended Feb. 4 at $371/mt, which was up $2.50/mt on the day, up $17/mt on the week and $26.50/mt higher than 30 days previously.

Crude oil futures have been caught between short-term headwinds like vaccine shortages in the EU and lower mobility in China countered by growing indications of a longer-term recovery.

Crude oil futures have been firming as coronavirus infection rates eased in several countries, helped along by the rollout of vaccines, and thereby fueling positive demand sentiment.

The bullishness in the oil market has come amid signs the pandemic was starting to ease globally, spurring confidence among investors about the economic climate.

In terms of demand from shipping, the tanker market is likely to endure challenging conditions until at least the second half of 2021, as the pace of the oil demand recovery will be tied to the rollout of COVID-19 vaccines, tanker operator Euronav said Feb. 4.

That view was endorsed by S&P Global Platts Analytics, which said Feb. 4 that tanker rates in the first half of 2021 could be lower than forecast, “but the second half could make this up as we start to see the economic recovery and oil demand to increase”.

Upbeat sentiment in the bunker market in Singapore was underpinned by expectations that western low sulfur barrels are likely to arrive only in March. As such, the market is likely to remain balanced for February delivery trades.

Demand in Northwest Europe is expected to see continued pressure next week, after sources said that coronavirus was weighing further on a typically quiet period.

In the meantime, a stronger crude complex has deterred some buying appetite, although one source said that could not last for much longer. "It still feels demand is lower while the market remains firm but bunkers will have to be purchased at some point," the source said.

US bunker pricing has continued to trend mostly higher on support from US energy segments, although demand fundamentals remain weak for most ports. Sources in New York are eyeing logistics amid talk of February windows getting crowded due to delays in other ports and bad weather.

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.

Click here to see prices: https://www.bunkerworld.com/prices/

Platts ,
5th February 2021 14:19 GMT