BUNKERWORLD INDEX: Prices fall amid pockets of weak demand, prospects of Iran deal
21st May 2021 13:23 GMT

Bunker prices weakened May 20 as the possible removal of US sanctions on Iran weighed on the crude complex and tepid demand characterized marine fuel markets in key regions.

The Bunkerworld 0.5% sulfur fuel oil pricing index ended May 20 at $501/mt, down $3/mt on the day and $11/mt on the week, but $1/mt higher than 30 days previously. The BW380 index, which represents value for 3.5% sulfur fuel oil, ended the day at $393.50/mt, which was $3/mt lower on the day, $13.50/mt lower on the week and $8/mt lower than 30 days previously.

Iran's President Hassan Rouhani said during a televised cabinet meeting May 20 that a "main agreement" had been made to reinstate the nuclear deal, as the US has broadly committed to lifting its sanctions targeting Iran's oil, petrochemical and shipping sectors.

US, Iranian and European negotiators this week concluded a fourth round of indirect talks in Vienna over the nuclear deal known as the Joint Comprehensive Plan of Action.

However, a US Department of State representative said late May 20 that "many challenges" remained with the negotiations due to enter their fifth round in Vienna in the week beginning May 23.

Looking ahead, the only transport fuel with prospects for growth in the coming years is 0.5% sulfur fuel oil for shipping as demand for other key fuels struggles to bounce back from the impact of the COVID-19 pandemic, International Energy Agency oil market analyst Kristine Petrosyan told the S&P Global Platts European Bunker Fuel Virtual Conference.

Gasoline demand may have already peaked in 2019, jet fuel won't recover until 2024 and diesel demand is also slowing, she said, citing detail from the IEA's latest medium-term oil market outlook 'Oil 2021.'

"[Very low sulfur fuel oil] emerges as the only transport fuel with any demand growth compared to 2019," she said.

In regional markets, at Zhoushan in China, prices of delivered-basis marine fuel 0.5%S have increased amid weak prices in Singapore. Chinese bunker suppliers said they are close to achieving their sales targets for May and are shifting focus to improving sales margins.

Northwest Europe and the Mediterranean were not expected to see big changes in demand over the coming week after buying appetite was reported between poor and satisfactory in the week ending May 21. However, with bearish sentiment in the wider oil complex pushing down bunker prices, demand could experience an uptick in due course, after buyers previously said they were waiting for prices to soften.

3.5%S FO fuel oil was tight in the Mediterranean this week, with no clarity on when availability will improve, according to sources.

Sources expect both high sulfur and very low sulfur US Gulf Coast bunker markets to remain weak due to timid demand and year-low USGC 3.5%S FO cracks.

The BW Indexes are weighted daily indexes made up of price 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 BW 0.5% Sulfur 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 .,
21st May 2021 13:23 GMT