BUNKERWORLD INDEX: Falling crude stocks set the tone amid tightness in regional bunker markets
27th August 2021 11:06 GMT

Bunker prices leapt on the week as the oil complex received a lift from supply concerns and as lower US stocks pointed to continuing demand recovery, while bunker markets saw instances of low supply.

The Bunkerworld 0.5% sulfur fuel oil index ended Aug. 26 at $529/mt, a $3/mt rise on the day and a $28/mt increase on the week, although it was also $17/mt lower than the 30 days previously.

The BW380 index, which represents value for 3.5% sulfur fuel oil, ended the week at $438.50/mt, a $3/mt increase on the day, $23/mt higher on the week and $5/mt higher than the prior 30 days.

Crude markets have been bolstered by supply concerns in the Gulf of Mexico, as Tropical Storm Ida moves toward the area. Producers such as Chevron, Shell and BHP had begun moving non-essential crews from oil and gas platforms in the Gulf as the storm gathers pace, with Shell shutting down production at its Stones Field.

There is further bullishness from COVID-19-driven fears retreating amid continued demand recovery and unexpected supply tightness. Data from the Energy Information Administration showed US crude inventories falling by 3 million barrels to 432.6 million barrels for the week ending Aug. 20, bringing inventory levels to roughly 6% below the five-year seasonal average.

In bunker markets, total fuel oil volumes bunkered at the Port of Rotterdam in Q2 grew 7% on the year to 1.903 million, with 3.5% sulfur fuel oil increasing its share amid a steady 0.5%/3.5% sulfur fuel oil price spread, the latest data from the port authority showed.

Residual fuel oil demand in 2021 is forecast to grow 0.5 million b/d on the year, supported by bunkering and power generation, S&P Global Platts Analytics said Aug. 26.

South Korea's marine fuel 0.5% sulfur bunker supply is expected to tighten in September as the country's largest refiner, SK Energy, plans to reduce supply, market sources said Aug. 27.

SK Energy is looking to supply about 250,000 mt of 0.5% sulfur bunker fuel to the domestic market in September, down 100,000 mt from August, a company source said, adding that the planned cut is in line with the company's demand outlook.

Bunker demand was down across EMEA ports through the week and this is expected to continue into next week as prices move upward. Current tightness of 3.5% sulfur fuel oil in the Mediterranean is likely to continue into next week. However, availability is good across all other grades.

Latin American bunker markets continued to track the wild fluctuations seen recently in global oil prices, but most of them at a distance, with moderate price increases at the beginning of the week and mixed pricing at the end. Ports such as Valparaiso and Cartagena registered only small movements throughout the week but Balboa rose firmly.

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 .,
27th August 2021 11:06 GMT