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Integr8: European VLSFO bunker fuel prices are worth watching

Research contributor Steve Christy explains what is behind the steep rise in European VLSFO prices relative to markets elsewhere in the world and where the Rotterdam VLSFO price may go in the coming weeks.

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Integr8: European VLSFO bunker fuel prices are worth watching

By Steve Christy, Research Contributor, Integr8 Fuels
[email protected]  

22 February 2024       

Recent uptick in oil prices; but for temporary reasons

There are mixed signals driving the absolute price of oil at the moment, with a slightly more bullish push over the past two weeks. But, to put it in context, this recent uptick followed a sharp drop in prices at the end of January and into the first few days of February, when Brent crude fell from $82/bbl to $77/bbl. The ‘bullish’ push in the past two weeks has only brought Brent back to $82/bbl.

Looking at very low sulphur fuel oil (VLSFO) prices in Singapore and Fujairah, these have traded in a narrow $25/mt range so far this month and are still lower than their end January levels (and $35-40/mt lower than average November prices). This is not the case in Rotterdam.

Integr8: European VLSFO bunker fuel prices are worth watching

Behind these price movements there have been some temporary bullish factors in the oil industry so far this year. Arctic weather conditions in North America shut in around 0.9 million b/d of oil production and halted around 1.7 million b/d refinery operations. At the same time, there have been planned, heavy maintenance programs in the Atlantic Basin refining industry running through January and into February. This again has restricted product availabilities and led to lower stock levels. But these are temporary issues!

On the bearish side, in recent reports we have focused on the weak prospects for oil demand this year, and this is still in play, especially when you look at the International Energy Agency’s (IEA) latest forecast for 2024. Also, gains in non-OPEC production look as though they will be high this year, and the recent cuts in OPEC+ production have been limited to only 0.2-0.3 million b/d from December levels. Therefore, the fundamentals for this year would indicate a ‘lid’ on prices. This, plus the ability of the industry to work around the attacks on Red Sea shipping, has so far superseded the heightened political events and risks in the Middle East region.

European VLSFO prices are ‘more exposed’

From the chart above, Rotterdam VLSFO prices have risen more steeply than in Singapore and Fujairah over the past two weeks. Rotterdam VLSFO prices are around $50/mt higher than in early February, and unlike the other major bunkering hubs, Rotterdam prices are higher than we have seen so far this year, and some $10/mt above their November average.

Back in November, Rotterdam VLSFO was priced at around $580/mt and Singapore at around $680/mt, i.e. a differential of $100/mt. Between then and now Singapore prices have fallen by $40, but Rotterdam prices have gone in the opposite direction and are around $10 higher. The net result is that the differential between the two markets has narrowed from $100- to $50/mt.

 

 

 

 

 

 

 

 

graph 2 (1)

VLSFO pricing related to middle distillate pricing

The nature of VLSFO means supply and price movements are closely related to what is happening in other products. The chart below shows the close relationship between Rotterdam VLSFO and NW European diesel prices.

graph 3 (2)

The European VLSFO market looks like it will only get tighter

Europe is naturally short in the middle distillates of jet, diesel, and gasoil and so highly dependent on imports. The European sector had already been under pressure since the embargo on Russian supplies. However, the situation has tightened even further with the attacks on shipping in the Red Sea. These latest developments have hit diesel and jet shipments from the Middle East and India to Europe, with a leap in freight costs, longer voyage times via the Cape of Good Hope and tighter market conditions in Europe.

This loss of these supplies from east to west has partly been made up by an increase in diesel exports from the US to Europe. However, this may be short-lived as US refinery turnarounds in the first quarter cut availabilities and potentially limit diesel exports. Hence, European diesel (and so VLSFO) prices are likely to rise relative to VLSFO markets elsewhere in the world.

To compound this even more, Ukraine drone attacks on Russian refineries may have affected operations and so diesel exports from the country. Although this will not have a direct impact on the European diesel position, there is an indirect consequence, with other buyers of Russian products left short and having to source supplies from elsewhere, which will be in direct competition with European buyers.

Add to this a number of major European refineries going into turnaround in the north and Med regions, and the market is potentially even tighter!

If this isn’t enough, then there is a further layer to add to the argument; and that is the current exceptionally low distillate stock levels in Europe. The graph below shows the five year high/low range for middle distillate stocks in Europe, and that for the past two years stocks have been well below their five year average. More importantly, over the past three months stocks have been below their previous five year lows, and this is at a stage when we expect the market to tighten even further.

graph 4 (1)

Whatever happens, Rotterdam VLSFO prices are likely to be relatively high

All else being equal (it never is!), the fundamentals point towards a more bearish oil market, but with this relative strengthening in European VLSFO prices.

Beyond the fundamentals, the geopolitical risks at the moment clearly lie in the Israel/Gaza position and developments surrounding Iran. But there are also a number of elections this year that will contribute to more uncertainty, not least in the US.

However, as things pan out, the European distillate market does look tight going forward and this would mean relatively higher VLSFO prices in Rotterdam, and Europe generally.

 

Photo credit: Integr8 Fuels
Published: 23 February, 2024

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Bunker Fuel

ENGINE: East of Suez Bunker Fuel Availability Outlook (16 April 2024)

Prompt HSFO availability improves in Singapore; VLSFO and LSMGO availability good across several Chinese ports; several Middle East ports could face weather disruptions.

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RESIZED ENGINE East of Suez

The following article regarding regional bunker fuel availability outlook for the East of Suez region has been provided by online marine fuels procurement platform ENGINE for publication on Singapore bunkering publication Manifold Times:

  • Prompt HSFO availability improves in Singapore
  • VLSFO and LSMGO availability good across several Chinese ports
  • Several Middle East ports could face weather disruptions

Singapore and Southeast Asia

Bunker demand in Singapore has seen an uptick so far this week. Lead times for VLSFO in the port have shown significant fluctuations in recent weeks. Most suppliers advise up to 13 days for the grade, while some can accommodate within six days.

Prompt HSFO availability has slightly improved in the port, with recommended lead times now at 6-10 days, down from 8-14 days last week. LSMGO can be arranged within 2-6 days in Singapore.

According to Enterprise Singapore, the port's residual fuel oil stocks have remained relatively stable, matching March levels in the first week of April. The port’s fuel oil stocks have remained steady at 21 million bbls despite a 10% drop in the port's net fuel imports so far this month. Both imports and exports have decreased, with fuel oil imports down by 667,000 bbls, more than double the 249,000 bbls decline in exports. Conversely, middle distillate stocks in Singapore have averaged 9% higher this month.

In Malaysia's Port Klang, VLSFO and LSMGO grades are readily available, with some suppliers able to offer prompt dates for smaller parcel sizes. However, HSFO availability remains constrained due to limited product availability.

In the Indonesian ports of Jakarta and Surabaya, the availability of VLSFO and LSMGO remains good. Additionally, the port of Balikpapan has an ample supply of VLSFO.

China, East Asia and Oceania

All bunker fuel grades remain readily available in Zhoushan, with short lead times of 2-5 days recommended by several suppliers – virtually unchanged from last week.

In north China, Dalian port has ample VLSFO and LSMGO available. Similarly, Qingdao and Tianjin have abundant availability of VLSFO and LSMGO, while HSFO supply remains limited in both ports. The availability of VLSFO and LSMGO has improved in Shanghai, but HSFO remains constrained. In Fuzhou, Yangpu, and Xiamen, both VLSFO and LSMGO are readily available. However, in Guangzhou, the supply of low-sulphur fuel grades is limited for prompt delivery dates.

VLSFO and LSMGO remain readily available in the Taiwanese ports of Hualien, Kaohsiung, Taichung, and Keelung with recommended lead times of around two days.

All bunker fuel grades are readily available in Hong Kong. Lead times of seven days are typically recommended. But adverse weather conditions are predicted to hit Hong Kong on Sunday, which may impact bunker deliveries.

Despite subdued bunker demand, South Korean suppliers are maintaining competitive pricing for VLSFO. This is partly due to South Korean refineries offering bunkers at lower prices as they work to clear excess stockpiles. Busan's VLSFO price was trading at near parity levels with regional bunker ports such as Singapore and Zhoushan on Tuesday.

All bunker fuel grades remain readily available in South Korean ports, with most suppliers recommending lead times of 3-7 days. However, rough weather is forecasted over the weekend in South Korean ports including Ulsan, Onsan, Busan, Daesan, Taean, and Yeosu, which may potentially disrupt bunkering operations.

In Japan, sluggish bunker demand persists due to elevated prices and limited cargo availability. Tokyo's VLSFO was priced about $52/mt higher than Singapore's VLSFO on Tuesday and $48/mt higher than Zhoushan's. Lead times vary across key Japanese ports, from around five days in Tokyo, Chiba, Osaka, Kobe, Nagoya and Yokkaichi, to longer periods of 9-13 days in the ports of Mizushima and Oita.

In Western Australia, the ports of Kwinana and Fremantle have abundant supplies of VLSFO and LSMGO, with recommended lead times of 7-8 days in both ports. Moving to Sydney in New South Wales, prompt supply of LSMGO is available, while HSFO availability is limited.

In Victoria, Melbourne has an abundant supply of VLSFO and LSMGO, while Geelong also offers good availability of VLSFO. However, HSFO supply faces pressure in both Melbourne and Geelong. In Queensland, the ports of Brisbane and Gladstone have good VLSFO and LSMGO supply available, with recommended lead times of 7-8 days. HSFO availability remains limited in Brisbane.

Additionally, adverse weather conditions are predicted in the Thai ports of Koh Sichang and Leam Chabang between 19-22 April, and in the Vietnamese ports of Ho Chi Minh and Hai Phong on 16 April, posing potential challenges for bunker deliveries.

South Asia

VLSFO and LSMGO availability remains constrained in Indian ports, with most suppliers experiencing supply shortages.

Ports such as Mumbai, Kandla, Tuticorin, Chennai, Cochin, Visakhapatnam, Haldia and Paradip are encountering VLSFO and LSMGO shortages, leading to uncertain delivery schedules contingent on availability.

Sikka and Mumbai ports in India are forecast to experience adverse weather conditions on Wednesday and Thursday, which could disrupt bunkering.

Middle East

Bunker demand has improved in the UAE port of Fujairah. Most suppliers are advising lead times of around seven days for all grades in the port. However, the port was witnessing strong winds and waves on Tuesday, which might impact barge deliveries there. Bad weather conditions are forecast to persist until Thursday, which could complicate deliveries.

The other UAE ports of Khor Fakkan, Dubai, Saqr and Ras Al Khaimah are also facing adverse weather conditions, which are likely to continue until Thursday. Bad weather conditions could affect bunkering in these ports.

Most suppliers are recommending lead times of around seven days across all bunker fuel grades in Khor Fakkan.

Port operations in Dubai remain restricted, while the ports of Saqr and Ras Al Khaimah are on alert, according to GAC Hot Port News.

In the nearby Sohar port in Oman, bunker operations have largely remained unaffected by bad weather conditions, a trader says. There may be some delays, but bunkering so far has not been suspended in the port, the trader adds.

In Omani ports such as Sohar, Salalah, Muscat, and Duqm, LSMGO is readily available.

In Saudi Arabia's Jeddah port, both VLSFO and LSMGO remain good. However, in the nearby port of Djibouti, certain suppliers are experiencing VLSFO shortages, while LSMGO supply remains consistent.

Bad weather is predicted in the Egyptian ports of Suez and Said, Saudi Arabia's port of Jeddah and the Djiboutian port of Djibouti between Tuesday and Thursday, which may impact bunker operations.

By Tuhin Roy

 

Photo credit and source: ENGINE
Published: 17 April 2024

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Bunker Fuel

Panama bunker fuel sales volume drops by 16.4% on year in March 2024

Total bunker sales at Panama was 390,678 metric tonnes (mt) in March 2024, compared to sales of 467,425 mt during the similar period in 2023, according to PMA data.

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RESIZED Panama

Bunker fuel sales at Panama fell by about 16.4% in March 2024, according to the latest data from La Autoridad Maritima de Panama, also known as the Panama Maritime Authority (PMA).

Total bunker sales at Panama was 390,678 metric tonnes (mt) in March 2024, compared to sales of 467,425 mt during the similar period in 2023. 

In March 2024, the Pacific side of Panama posted bunker sales of 329,076 mt; 191,038 mt of VLSFO, 106,059 mt of RMG 380, 10,270 of marine gas oil (MGO), and 21,709 mt of low sulphur marine gas oil (LSMGO) were delivered.

The similar region saw total marine sales of 393,706 mt a year before on March; with VLSFO sales at 266,658 mt, RMG 380 sales at 87,506 mt, MGO sales at 10,641 mt, and 28,901 mt of LSMGO being sold.

Panama’s Atlantic side, meanwhile, recorded total bunker fuel sales of 61,602 during March 2024; the figure comprised 43,294 mt of VLSFO, 8,170 mt of RMG 380, 3,972 mt of MGO, and 6,166 mt of LSMGO.

It saw total sales of 73,719 mt in March a year before; with VLSFO sales of 55,485 mt, RMG 380 sales of 6,219, 3,613 mt of MGO, and LSMGO sales of 8,402 mt.

 

Photo credit: George Keel
Published: 16 April 2024

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Bunker Fuel

Singapore: Bunker fuel sales increase by 6.4% on year in March 2024

4.45 million mt of various marine fuel grades were delivered at the world’s largest bunkering port in February, up from 4.18 million mt recorded during March 2023, according to MPA data.

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Singapore: Bunker fuel sales increase by 6.4% on year in March 2024

Sales of bunker fuel at Singapore port increased by 6.4% on year during March 2024, according to Maritime and Port Authority of Singapore (MPA) data.

In total, 4.45 million metric tonnes (mt) (exact 4,448,243 mt) of various marine fuel grades were delivered at the world’s largest bunkering port in February, up from 4.18 million mt (4,178,950 mt) recorded during March 2023.

Deliveries of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in March (against on year) recorded respectively 1.61 million mt (+40.4% from 1.27 million mt), 2.42 million mt (+9.91% from 2.55 million mt), zero (from zero), 5,100 mt (+132% from 14,700 mt) and zero (from zero).

Singapore: Bunker fuel sales increase by 6.4% on year in March 2024

Bio-blended variants of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in February (against on year) recorded respectively zero (from zero), 66,000 mt (-46.9% from 28,400 mt), zero (from zero), zero (from zero) and zero (from zero).

LNG and methanol sales were posted respectively at 38,600 mt (from 3,700) and zero (from zero).

Related: Singapore: Bunker fuel sales up by 18.8% on year in February 2024
Related: Singapore: Bunker fuel sales up by 12.1% on year in January 2024

A complete series of articles on Singapore bunker volumes by Manifold Times in 2023 can be found below:

Related: Singapore achieves milestone with record year for bunker sales in 2023
Related: Singapore: Bunker fuel sales fell 2.5% on year in November 2023
Related: Singapore: Bunker fuel sales increase by 3.5% on year in October 2023
Related: Singapore: Bunker fuel sales increase by 7.7% on year in September 2023
Related: Singapore: Bunker fuel sales continue upward trend, rose by 3.4% on year in August 2023
Related: Singapore: Bunker fuel sales continue upward trend, rose by 9.7% on year in July 2023
Related: Singapore: Bunker fuel sales continue to increase by 4.7% on year in June 2023
Related: Singapore: Bunker fuel sales increase by 11.8% on year in May 2023
Related: Singapore: Bunker fuel sales continue upward trend, rose by 13.4% on year in April
Related: Singapore: Bunker fuel sales continue upward trend, rose by 10.8% on year in March
Related: Singapore: Bunker fuel sales continue upward trend, up 8.3% on year in February
Related: Singapore’s bunker sales kickstarts well with 8.6% increase on year in January 

Photo credit: Maritime and Port Authority of Singapore
Published: 15 March 2024

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