Hong Kong bunker fuel price jumps to year high on crude gains, supply tightness
The Hong Kong bunker fuel price for delivered 380 CST finished strongly at the Asian close Thursday, jumping up $14.50/mt from Wednesday to hit a near 13-month high of $269.50/mt at the Asian close, tracking day-on-day gains in crude as well as supply tightness in the Hong Kong market.
Hong Kong 380 CST delivered bunker fuel was last assessed higher on September 1, 2015, at $270/mt, S&P Global Platts data showed.
Front-month November ICE Brent crude futures jumped $1.97/barrel from the previous session to $48.17/b at 4:30 pm Singapore time (0830 GMT) Thursday. The contract was last higher at the Asian close on September 9, 2016, when it stood at $49.32/b.
Crude prices had climbed strongly immediately after OPEC members announced a deal on Wednesday to cut production to 32.5 million-33 million b/d from 33.25 million b/d currently. While those gains were pared back in Asia trade Thursday, bunker fuel prices in Hong Kong remained buoyant with the gains outpacing those seen in the physical FOB Singapore high sulfur fuel oil cargo market.
Bunker fuel markets typically closely track movements in the fuel oil sector as they are closely related products. At the Asian close Thursday, the FOB Singapore 380 CST high sulfur fuel oil flat price assessment was at $256.32/mt, up $10.48/mt from Wednesday.
“Hong Kong is tight at the moment,” a trader said this week, adding that offers from suppliers had been leaning towards the high side.
Another trader said an oil major with terminal facilities in Hong Kong was heard to be experiencing some supply tightness, but that the situation is expected to ease soon as its cargoes were being loaded in Singapore currently, for delivery into Hong Kong.
The tighter supply situation in Hong Kong was borne out during the Platts Market On Close assessment process, which saw rapid trading activity. Chimbusco Pan Nation, the sole buyer, steadily increased its bid price through the process even as Sinopec Hong Kong Fuel Oil, the sole seller, retreated on its offer price, with five trades eventually concluded by the end of the MOC.
Strong gains were recorded across all these ports on Thursday as well, with assessed 380 CST bunker prices for delivery at these centers touching one-year highs as well.