AMERICAS BUNKERS: Key market indicators this week

Spot marine fuel markets in North and South America continue to monitor key global energy sector indicators the week of Oct. 5.

WHOLESALE

US fuel oil markets this week will primarily look towards the underlying crude complex for market direction, as VLSFO bunker demand remains low while HSFO demand as a refinery feedstock has held steady.

USGC HSFO was assessed Oct. 2 at $34.14/b, down $2.09 on the week, and USGC marine fuel 0.5%S fell $15 to $283.25/mt. Both markets lagged slightly behind the $2.67/b decline week on week in the ICE front-month Brent futures contract.

Multiple market participants said that bunker demand in the US remains low, though blending components have become harder to find as refineries seek to limit distillate production.

Demand for HSFO has held strong from refiners buying the product as a refinery feedstock.

Data intelligence firm Kpler data showed the US imported 2.974 million barrels of HSFO for the week ended Sept. 28, of which 2.363 million barrels (79.4%) went to the USGC.

Sources added that HSFO prices are still too strong compared to marine fuel 0.5%S to warrant any incremental use for bunkering.

US/CANADA

North American ports enter the first full week of October on a downward trend following bearish fundamentals for the period of Sept. 25 through Oct. 2, with liquidity remaining stagnant on slow-to-change demand dynamics. Market participants for US Gulf Coast ports could be focused on possible disruptions related to tropical storms headed to the region, with recent weeks seeing operations shut down for days under similar conditions.

In Houston, spot retail 0.5%S value fell to $273/mt ex-wharf on Oct. 2, down $17 (5.9%) week on week from the Sept. 25 assessment. MGO pricing in Houston closed last week at $330/mt ex-wharf, down $7 (2.1%) over the same period.

After last week opened with a "small rally," as one USGC supplier put it, the region closed the week under pressure from a weaker crude complex, which saw front-month Brent value come off $2.67/b ($20.26/mt) week on week.

In New York, weaker energy and demand fundamentals pressured values last week, with a local source citing some supply tightness for 0.5%S retail volumes while adding that seasonal demand should pick up in the second half of the month.

The ex-wharf spot price of 0.5%S in New York fell to $316/mt, down $8 (2.5%) from Sept. 25 to Oct. 2, while MGO value shed $5 (1.5%) over the same period to close the week at $338/mt ex-wharf.

On the West Coast, spot pricing for 0.5%S received some early support last week from higher Singapore pricing, which allowed some gains for markets such as Vancouver, while MGO values felt pressure from increasing competition, a local source said.

The ex-wharf spot price of 0.5%S in Vancouver was assessed Oct. 2 at $292/mt, down $12 (3.9%) from Sept. 25 levels, while MGO value closed the week at $360/mt ex-wharf, down $24 (6.3%) over the same period.

"Trying to sort out firmer Asian levels versus softer crude," a regional source said of the dynamic that had Singapore assessments rising amid declines in the US energy complex.

LATIN AMERICA

Latin bunker prices in Latin America face an uncertain week after the bearish mood seen in the last few days in global oil markets, which has pushed regional levels down almost across all segments and across all ports.

However, strong local fundamentals allowed most of the ports to register milder drops than those seen in the energy complex, with some ports supported by an increasing but still hesitant demand. In others, suppliers were reluctant to give way to all-out declines on profit-margins concerns, according to market sources.

"Prices have adjusted downwards, in tandem with has happened with crude," a market participant said.

The strongest decline was seen in Cartagena, where marine fuel 0.5%S retreated $25/mt (7.04%) during the week to end at $330/mt, its lowest level since $327/mt on May 28. High sulfur bunker fuel also shrank steeply, $23/mt (6.76%) to $317/mt, a value last seen on Aug. 4.

As in the rest of Latin America, the marine gasoil segment showed resistance to the downward pressure and only declined $3/mt (0.68%) in the Colombian port to end at $438/mt.

"The Colombian market has been very slow, there is not too much demand," a participant said, while another pointed to a strong competition among suppliers contributing to the declines.

Buenos Aires was the port with the strongest performance last week. The 0.5%S declined only slightly, with 0.5%S falling $3/mt (0.85%) to $352/mt. Marine gasoil remained steady, being assessed on Oct. 2 at $470/mt.

Participants in the Argentinian market said throughout most of September, bunkers requests from the agricultural sector remained strong but exporters started to slow their fuel purchases in the last few days.

"September is normally a weak month, however this year it was really good," another market participant said. "Even so, September ended with lower buying orders and October started slow."

Another source in the market concurred but said he expected demand from exporters to rebound soon.

Other ports registered declines in the last week of September, pressured by the energy complex but supported but a slightly higher demand, a South American source said pointing to Peru, Ecuador and Chile.

"There was a bit more movement this week," the source said. "I saw volumes between 500 to 1,000 mt. However, everything is relative, one thinks things are improving, and the next week it is dead."

In Valparaiso, where prices have been falling steadily in the last two weeks after a period of firm levels, 0.5%S fell $15/mt ($3.88%) to $372/mt, dropping to its lowest level since June 25, when it was valued at $358/mt. Regarding marine gasoil in the Chilean port, it declined $3/mt (0.54%) to $550/mt but the high sulfur bunker fuel shrank $13/mt (3.46%) to $363/mt.

"In Latin America, at least for now, everybody on the Pacific Coast has very good supply and low demand," a South American market source explained. "That is why prices are going down a little bit. But suppliers are reluctant to keep on lowering prices because otherwise they would end up selling without a [profit] margin."

In the key hub of Balboa, higher resupply costs continue to squeeze the market, nonetheless, those pressures have been offset by the drops in global oil markers, leading to an $8/mt (2.52%) fall in 0.5%S to $310/mt, and a $9/mt (2.42%) decline in marine gasoil.

"With the instability we have seen in levels, there is not much way to make a forecast," the South American source said.