BUNKERWORLD INDEX: Prices firm but choppy waters ahead from crude, regional markets
18th June 2021 12:08 GMT

Bunker prices strengthened over the week to June 17 on rising crude but uncertainty about future interest rates and instances of weak demand in regional bunker markets could temper bullishness.

The Bunkerworld 0.5% sulfur fuel oil pricing index ended June 17 at $542/mt, down $2/mt on the day but up $11/mt on the week and $38/mt higher than 30 days previously.

The BW380 index, which represents value for 3.5%S FO, was at $430/mt, a $1/mt fall on the day, a $10/mt increase on the week and $33.50/mt higher than 30 days previously.

Crude oil markets have seen a mixed narrative unfold. "Improving traffic data amid an acceleration of vaccine rollouts have boosted demand for gasoline and diesel in Europe and the US," ANZ Research analysts said in a June 18 note.

However, bearish hues are clouding the horizon following the US Federal Reserve's hawkish tone at the Federal Open Market Committee meeting June 16, where officials suggested they expected to make two interest rate increases by the end of 2023.

In an endorsement for scrubber and 3.5%S fuel oil demand, Antwerp-based physical bunker supplier Northstar Bunker relaunched sales of 3.5% sulfur fuel oil as demand from scrubber-equipped ships rose, a company official said.

"Demand from the spot market for high sulfur fuel oil has been picking up," the official said.

The economics of using scrubbers -- or exhaust gas cleaning systems, as they are more formally known -- is improving as 3.5% fuel oil's discount to the more expensive 0.5% fuel oil widens, with the spread now reaching levels not seen since the first quarter of 2020, market sources have said.

A Singapore-based bunker supplier said the market was still on track to supply at least 900,000 mt of 3.5%S fuel oil in June, as this volume constitutes the base demand. In terms of patterns in demand during H1 June, traders however drew a parallel with trends in May and cautioned that the market may quieten in H2 June despite a “steady inflow of inquiries” during H1 June.

Bunker fuel sales in Singapore rose 3.7% year on year to 4.07 million mt in May, preliminary data released June 13 by the Maritime and Port Authority of Singapore showed, fueled by a jump in high sulfur bunker fuel. Bunker fuel sales of marine fuel 0.5%S slipped 1.3% from 2.812 million mt in April

Availability in the European bunkers market is expected to remain satisfactory at most ports as ample supply has characterized recent market conditions. Underlining bearish sentiment, buying appetite for bunker fuel remained poor, particularly in the Mediterranean, during the week amid volatile prices.

Latin America bunker markets have seen supply constraints at a couple of ports and weak demand in others, amid rising global oil prices, which could continue.

While social protests and blockades have continued for more than a month and half in Colombia, suppliers have managed to continue supplying in a framework of low demand.

The US Gulf Coast had been oversupplied and had yet to see much of a rise in demand, sources said, which could help the two-tiered pricing structure persist in the Houston 0.5%S fuel oil market, based on stem sizes.

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 .,
18th June 2021 12:08 GMT