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ENGINE: Europe & Africa Bunker Fuel Availability Outlook

Europe remains well supplied with bunker fuels, and while there are some delays in Algeciras and Gibraltar from the start of the week, bunker congestion is expected to ease in these ports shortly.

Northern European and Mediterranean bunkering ports have prompt volumes of all fuel grades to supply. VLSFO and LSMGO are available on short notice and HSFO380 stems require booking around 3-4 days ahead in the ARA and Gibraltar Strait.

Fewer suppliers offer HSFO in the Canary Islands and South Africa, where stems require longer lead times. HSFO180 has been particularly tight in Durban and Port Elizabeth in recent months, while VLSFO and LSMGO can be procured prompt.

Bunker supplies are ample in ARA even as its fuel oil inventories were drawn down to four-week lows towards the end of May. The bunkering hub’s gasoil inventories have added weight and risen to six-week highs amid stronger regional refining margins for middle distillates incentivising higher production.

Rotterdam’s LSMGO price has strengthened against Rotterdam’s VLSFO and front-month ICE Low Sulphur Gasoil futures by equal amounts in the past week. LSMGO’s discount to ICE Gasoil’s premium has narrowed by $9/mt to $20/mt, while its premium over VLSFO has gone up by $9/mt to $66/mt.

Both ICE Gasoil and LSMGO prices have gained against VLSFO in the past month, with middle distillate demand helped by preparations for peak summer driving activity and easing of Covid-19 restrictions on mobility.

Gasoil demand is expected to rise further relative to VLSFO bunker demand as the recovery in diesel consumed as road fuel should outpace any growth in bunkering. This is reflected in forward curves showing a slight backwardation for VLSFO, while ICE Gasoil’s curve is in a contango until September-October, before joining VLSFO into backwardation for the remainder of the year.

Loading delays in Algeciras and Gibraltar caused congestion to build at the beginning of the week. Vessels were waiting for bunker barges to become ready, pushing bunker queues in Gibraltar to nine vessels waiting on Tuesday, according to local port agent MH Bland. Congestion eased to six vessels on Wednesday morning, before other vessels joined the queue for a total of eight on Wednesday afternoon.

Some suppliers in the two ports are running behind schedule, with delays ranging from half a day to a day. It could be possible to receive bunkers in Gibraltar sooner, however. A vessel taking bunkers in Gibraltar was informed that the stem would be delayed by around nine hours, while it was eventually supplied within 2-3 hours after the vessel arrived in port.

Delays are shorter in Ceuta at 4-16 hours, while Tenerife and Las Palmas have no delays, MH Bland says.

The weather forecast looks a lot calmer for Mediterranean ports going forward than it has in previous weeks. High winds and swell are generally a greater threat to bunkering in the winter and spring months than in the summer, and there are no weather disruptions on the horizon.
Source: ENGINE (https://engine.online/)

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