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BUNKERWORLD INDEX: Prices up amid mixed outlooks for crude, regional marine markets
13th August 2021 09:37 GMT

Bunker prices recovered through the week ended Aug. 13 amid widely varying supply dynamics in regional markets and with uncertainty over the direction of crude.

The Bunkerworld 0.5% sulfur fuel oil index ended Aug. 12 at $530/mt, a $4/mt rise on the day, a $5/mt fall on the week and $27/mt lower than 30 days previously.

The BW380 index, which represents value for 3.5% sulfur fuel oil, ended Aug. 12 at $432/mt, a rise of $2/mt on the day, an $8.50/mt increase on the week and $9/mt lower than 30 days previously.

Crude oil futures showed growth through the week, remaining within a well-worn range as traders continued to assess the demand concerns stemming from the rapid spread of the coronavirus delta variant.

The International Energy Agency Aug. 12 lowered its estimate of 2021 demand growth to 5.3 million b/d from 5.4 million b/d, and cut its second-half 2021 demand estimate by 600,000 b/d to 98.15 million b/d.

But OPEC said Aug. 12 it was keeping its global demand forecasts for 2021 and 2022 unchanged, and that oil demand should remain higher than supply over the coming months.

"It is not yet clear whether the spread of the delta variant will have more of a breaking effect on demand after all," Carsten Fitsch, an analyst at Commerzbank, said in an Aug. 12 note.

Recovery in global refinery runs slowed down in July "as new waves of COVID-19 cut into fuel demand while margins remained under pressure," the IEA said.

The EIA "tempered" its previous expectations for a "strong ramp-up" in August and now expects runs to rise "marginally" to 79.8 million b/d, with refineries replenishing stocks before Q4 maintenance.

A rise in refinery throughput has countered the strong fuel oil demand for bunkers and power generation, the IEA said, adding that "rising supplies of heavy sour crude from OPEC+ participants increasingly weighed on high sulfur fuel oil cracks."

The competitive pricing of IMO 2020-compliant marine fuel at China's Zhoushan port is likely to be sustained as state-owned refiners set the stage to ramp up upstream production to cater to the downstream delivered bunker market, industry sources said.

The two heavyweights in the China marine fuel market, Sinopec and Chimbusco -- a PetroChina-COSCO joint venture -- will likely maintain a price advantage over competitors to boost bunker sales, leaving other suppliers scrambling to trim valuations of Zhoushan-delivered marine fuel 0.5%S bunker, market participants said.

In the Mediterranean, tightness on high sulfur fuel oil in the Mediterranean had been in place for the last month, pushing prices up. This was expected to last until the end of the summer season at least, market sources said.

Spot marine fuel bunkers markets in the Americas saw several ports continue to deal with limited liquidity, with market players eying upstream energy markets for direction.

The West Coast was heard dealing with a wide range of values, while California markets were beginning to be discussed at much higher levels. A local source pointed to possible lack of supply as a driving factor to close this week.

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 .,
13th August 2021 09:37 GMT