Bunker prices in the Mediterranean have plunged over the week in tandem the ICE Brent futures, but buyers remain reticent.
“As the market has edged down, the inquiries have been fewer and fewer,” a supplier said.
Front-month ICE Brent futures have fallen back from a more than four-year high of over $71/b in late January. At 1026 GMT, the contract was trading at $64.47/b.
The price of 380 CST delivered bunker fuel at Piraeus dropped $7 on the day to be assessed at $375.00/mt Thursday, and at Istanbul prices fell $2 to be assessed at $384.00/mt, the lowest since December 27 and December 21, 2017, respectively. Indications were heard in the European morning Friday even lower at $370/mt for Piraeus and $372-$375/mt for Istanbul.
Despite the drop in prices throughout Wednesday and Thursday, buyers only emerged for a brief period toward the end of Thursday to take advantage of the downward movement.
“Everybody waited for the market to drop. As soon as it established…Brent at $65/b and the last hour of the day to buy, all the inquiries came in packs,” a trader said.
Friday encouraged some buy-side activity in the usual manner as there was the typical rush to fix product before the weekend.
“There is better demand, it’s the usual Friday activity though,” a Istanbul supplier said. Nonetheless buying activity has not been as strong as suppliers had hoped as they believed such low prices would lure buyers out.
“People are waiting for the market to drop more, they are scared to fix so are just on standby and waiting till the last minute,” a Malta-based supplier said.
However, hedging will have taken the sharp edges off the recent swings in the futures market, sources said.
“It depends on the strategy. We are fully hedged. We do not care if the market is high or low, it is just about the premiums we can sell at,” the trader said.
Some refineries tend to follow a monthly average pricing strategy, the trader added.
On the availability side, suppliers have not reported any issues with availability in the Mediterranean, and traders see the rest of February balanced with barrels open to the market.
Source: PlattsPrevious Next