The benchmark February Brent contract traded as high as USD 63.65 yesterday. This is the highest level since 20 November.
Several factors have supported the oil market over the last couple of days, despite the focus on potential oversupply and ongoing peace negotiations that may remove some of the geopolitical premium.
Fujairah
The Fujairah market has plenty of fuel stocks with total oil product stocks in Fujairah reported at 20.849 million barrels as they held above the 20-million-barrel level for the third week running.
Overall, there was a net build of 197,000 barrels or an overall rise of 1% week-on-week. The weekly stocks movement in Fujairah saw a rise in middle distillates and heavy residues while light distillates posted a draw.
Local suppliers though have seen barge lead times push out to 7-10 days for VLSFO and HSFO, so ensure inquries are sent timely to avoid prompt premiums.
New York
Demand from liners for .5 and HSFO remains steady. Avails for both products waning into year end. Barge for LSMGO have been reduced recently in NYH, due to a change of equipment to different charterers.
Panama
Light inquiries.
Gibraltar
Weather is expected to be not so good in the coming days.
Malta
Weather is not expected to be good in general in the MED.
Durban
Durban's demand continues to flag, with little to no action currently. Only a few HSFO requests seen; Port Elizabeth and Cape Town seemingly busier the last days.
Port Louis
A quiet week, more even so than usual, as now hearing from local gasoil suppliers in the fishing sector whom wonder where the inquiries have gone. With the Red Sea potentially opening fully in coming while, this may be a reason....suppliers will be hungry and lower price levels could come into play.
Walvis Bay
Walvis Bay is extremely tight, with a number of suppliers without cargo and no end in sight as to replenishment dates. A tough place to call currently and clients should plan accordingly.
Houston did not report before the editorial deadline.
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First, Trump has sharpened his rhetoric towards Venezuela, stating on Saturday that the airspace in and around the country should be considered closed. This has fueled speculation of a US-led strike or even an invasion. Trump spoke with Venezuelan President Maduro on Sunday.
Venezuela produces around 1 million barrels per day, roughly 1 percent of global supply, and exports about half of those.
If the United States blocks Venezuelan exports, it could affect the oil market. However, given the expected oversupply in the coming quarters, the risk should not be overstated.
However, in the bunker market, it is crucial to keep in mind that Venezuela exports a heavy, sour crude slate, adding a significant amount of residual oil to the market. Hence, if the situation escalates further, it could add to the HSFO crack on the margin. That said, HSFO oil is under pressure now from growing supply due to more OPEC+ oil hitting the market, high refinery utilizations in a situation where demand is seasonally weak.
Secondly, Ukraine has once again struck the oil export terminal in Novorossiysk. This has forced the Caspian Pipeline Consortium, which ships Kazakh crude through the port, to halt loadings. According to a Russian newspaper, capacity has been severely reduced and may remain so for the next six months. About 80 percent of Kazakhstan’s oil exports pass through Novorossiysk. Ukraine also struck two shadow-fleet tankers over the weekend, and yet another refinery has been hit. Ukraine’s “sanctions” once again appear more effective than the Western ones.
Peace talks between Ukraine and the United States took place in Florida over the weekend. Both sides report progress. Today, the inexperienced US special envoy Witkoff has again travelled to Moscow to meet Putin. It is challenging to see Putin agreeing to anything short of complete Ukrainian capitulation. We therefore expect no peace agreement in the near term. This also adds upside risk to oil prices.
Third, OPEC+ confirmed over the weekend that production quotas will remain unchanged in the first quarter, as expected. This reinforces the message that the group does not want an oil price below USD 60. We agree and see strong support for Brent in the low sixties.
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