BUNKERWORLD: Bunker prices climb on mounting energy prices, supply disruptions
11th October 2021 08:15 GMT

Bunker fuel prices rose through the week as fears of an energy crisis showed few signs of abating and as new instances of disruption to bunker supplies emerged.

The Bunkerworld 0.5% sulfur fuel oil index complex finished the week ending Oct. 9 at $589/mt, down $4/mt on the day but up $12/mt on the week and $47/mt higher than 30 days previously. The BW380 index, which represents value for 3.5% sulfur fuel oil, ended the week at $511.50/mt, which was $5/mt lower on the day but $23/mt higher on the week and $59/mt higher than 30 days previously.

Crude oil futures have found support above $80/b, with the US Department of Energy having to refute reports it plans to tap into strategic reserves to relieve rising gasoline prices.

US Energy Secretary Jennifer Granholm was quoted as saying the US was considering releasing stocks from its strategic reserves as well as reimposing a crude export ban in a bid to stem high gasoline prices. Following this, the Department of Energy in a statement Oct. 7 said Granholm had not endorsed either option and was only including them among "all the tools" open to the administration.

Recent supply-side developments keep open the possibility of a cooling market, with Saudi Arabia announcing Oct. 5 that it will cut prices for Asia-bound crude in November.

In addition, Russia's President Vladimir Putin said Oct. 6 that the country was prepared to increase supplies of natural gas to Europe. This comes amid European fears of a winter energy crisis.

However, energy futures for the winter remain supported.

Global tanker rates are likely to recover in the fourth quarter as easing of coronavirus-related lockdowns pushes up demand amid declining imported stockpiles and rising energy prices, but slow scrapping and ample supply of ships will cap gains, market participants said.

"Tankers are cyclical and so from current dismal levels the only way is up. The question is when and how much," said Ole-Rikard Hammer, an Oslo-based analyst with Arctic Securities. Oil demand may increase strongly in the coming months as vaccinations in emerging markets catch up with developed nations, he said. The gap between oil demand and freight volumes is large and inventories are falling rapidly, he added.

South Korea's 380 CST HSFO bunker supply is expected to be tight in October as Hyundai Oilbank and SK Energy are running low on high sulfur supplies, market sources said in the week started Oct. 3.

Operations at Russia's Black Sea port of Novorossiisk have been affected by a storm that started Sept. 27 and caused disruption through the week, with crude and product tankers waiting to load, a spokesperson for Russian crude oil pipeline operator Transneft said Oct. 6.

Latin America bunker prices are expected to continue tracking the intense variations in global energy values but lagging them and at a more moderate pace, as has happened in the last few days. Prices have been especially strong in the marine gasoil segment, with supply concerns voiced for Argentina, while availability of this fuel is recovering in Colombia, according to market sources.

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.

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

Platts ,
11th October 2021 08:15 GMT