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AMERICAS BUNKERS: Key market indicators May 3-7

Highlights

Panama's pricing keeps strength

Houston's 0.5%S falls amid competitive environment

Asia supports advances in US West Coast prices

Houston — Spot bunker prices in the Americas started the week on a firm note May 3, supported by bullish global oil prices and renascent demand, but on the Gulf Coast, competition remains strong.

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Latin America

Spot bunker prices in Panama are expected to remain bullish this week, supported by local fundamentals and an improved outlook for oil demand in the US.

The week of April 26-30 saw increases in almost all key ports in the region, erasing the retreats of the previous week.

In Panama, marine fuel 0.5%S rose $11 (2.2%) during the period, to be assessed at $508/mt, while marine gasoil climbed $10 (1.7%) to $600/mt.

"During the week, supply has remained tight, with a lot of demand pushing levels up, but more than that, ICE gasoil has risen more than $30/mt in the last few days, which unfailingly is transferred to bunker prices," a market source said.

Another factor is a heightened cost of resupply due to freight higher costs, especially in the dirty ships market, the source added.

The 0.5%S also rose steeply in Brazil, moving up $19 (3.9%) last week to $509/mt in Santos, after falling 2.4% the previous week. MGO in Santos jumped $14 (2.1%) to $673/mt, however, it is expected to fall this week after Petrobras applied May 1 a new reduction to its domestic diesel and gasoline prices as part of a continuing policy to keep up with variations in international values. The state-led oil company said that even if crude oil prices have remained above $60/b in recent weeks, the Brazilian real gained about 4.5% against the dollar.

In Argentina, 0.5% increased $16 (3.1%) to $530/mt in Buenos Aires, with a tightened supply expected for the next couple of months.

"Apparently, both May and June will be two difficult months. The Cammesa factor comes into play," a market source said, adding that as it happens every winter in Argentina, the wholesale power utility administrator takes a large amount of the fuel oil available to gear it to power usage. At the same time, grain exports continue to demand bunker fuel up until around July.

In Cartagena, Colombia, where market sources said demand is showing a slight improvement, 0.5%S prices oscillated upwards last week but ended unchanged at $518/mt.

Chile's Valparaiso was the only Latin American port showing a decline last week in 0.5%S pricing, falling $7 (1.1%) to $615/mt. However, the previous week it had shown a strong advance of $18/mt, while almost all the other regional ports experienced declines

North America

On the US Gulf Coast, marine fuel 0.5% retreated for second consecutive week, falling $5 (1.1%) in the April 26-30 period to $470/mt. A similar pattern was seen in the high sulfur bunker segment, where IFO 380 shed $5 (1.3%) to $368/mt.

"Houston is falling due to lack of demand, not because the cost of resupply is falling," a market source said. While another one pointed to a heavily competitive environment which one source describe as "insane".

In New Orleans, the fuel rose $10 (2.1%) to $495/mt. High sulfur IFO 380 remained unchanged, at $383/mt.

However, the price strength in the Louisiana port faces seasonal challenges. "NOLA will be a little depressed demand wise for the summer," a market source said, "but that is pretty typical for this time of the year. We won't see much increase until grain season returns around September."

In the marine gasoil segment, both ports experienced $11 increases, with MGO in Houston being assessed at the end of last week at $556/mt and in New Orleans at $576/mt.

Spot bunkers on the US Atlantic Coast tailed off slightly April 30 after showing gains April 26-29. Sources said demand was still low overall, but showing signs of life as more pandemic restrictions are lifted around the US.

Stronger Asian wholesale segments gave strength to US West Coast prices over the course of last week.