BUNKERWORLD INDEX: Prices show bullish signs, track rising crude
26th February 2021 14:16 GMT

Bunker market players expect prices and buying appetite to take their queue from the wider oil complex, which for now shows bullish signals.

The BW0.5%S Index ended Feb. 25 at $524/mt, a $10/mt increase on the day, an $18/mt rise on the week and $75/mt higher than 30 days previously.

The BW380 Index, which represents value for 3.5% sulfur fuel oil, ended Feb. 25 at $409/mt, was up $8.50/mt on the day, up $14/mt on the week and $50/mt higher than 30 days previously.

With vaccines expected to stem the spread of the coronavirus, the crude oil market has begun to view the demand outlook for oil through a bullish lens, all while expecting supplies to remain tight in the aftermath of the severe weather seen in the US.

Demand for bunkers from tankers could be facing headwinds as the realities of the pandemic set in for the tanker market. The record-breaking Q2 2020 is a distant memory and, instead, the market faces a slow recovery with low demand, stock drawdowns in consuming countries and loss-making rates, analysts at maritime industry body BIMCO said in a research note Feb. 25. Additionally, products are already where they need to be and therefore do not need to be transported by sea), the BIMCO analysts said.

At Asian hubs the direction that the end-user low sulfur marine fuel 0.5%S bunker market is likely to take in the coming days is contingent on flat price moves, traders said.

A rising flat price in recent days has led buyers to look to meet their requirements sooner rather than later, traders added. As such, bunker demand at major bunkering hubs like Singapore and Fujairah, UAE, was said to be steady to firm.

Some bunker traders at Rotterdam, in the Netherlands, said they were expecting 0.5%S FO tightness until the end of the month

Demand has been sluggish because of rising crude prices and the direction of crude is likely to set the tone for buying appetite over the next few days, traders said.

Bunker prices in the Americas are expected to remain volatile but firm, caught between a strong energy complex and a cautious recovery after the winter storm in Texas which might keep supporting prices in Houston and Panama.

The BW Indexes are weighted daily indexes made up of 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 BW0.5%S 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.

Platts ,
26th February 2021 14:16 GMT