MABUX: Bunker market this morning, June 03
The Bunker Review was contributed by Marine Bunker Exchange
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued downward trend on May 31:
380 HSFO - 390.21 (-6.00)
180 HSFO - USD/MT - 439.07 (-5.72)
MGO - USD/MT - 638.57 (-5.93)
Meantime, world oil indexes fell sharply on May 31, over 3%, after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, a key U.S. trade partner and major supplier of crude oil.
Brent for August settlement decreased by $3.34 to $61.99 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for July delivery fell by $3.09 to $52.50 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 10.99 to WTI. Gasoil for June decreased by $20.50.
Today morning oil indexes continue downward trend.
Trump vowed on May, 30 to ratchet up tariffs unless Mexico stopped people from illegally crossing into the United States. The plan would impose a 5% tariff on Mexican imports starting on June 10 and increase monthly, up to 25% on Oct. 1. That could hit the lucrative cross-border energy trade as the U.S. refiners import is roughly 680,000 barrels per day of Mexican crude. The United States also exports more fuels to Mexico than any other country, according to the U.S. Energy Department. Mexican President Andres Manuel Lopez Obrador on May,31 urged Trump to back down from the threats.
There are also fears that the U.S.-China trade war increased the danger of a recession. China is ramping up its response to President Donald Trump’s decision to impose higher tariffs on $200 billion of its exports and blacklist national technology champion Huawei Technologies Co. Its latest rhetorical salvo is a so-called White Paper that blames the U.S. for the breakdown in trade talks, accuses it of unreasonable demands. Though the paper released on June,2 in Beijing is largely a rehash of well-established policy positions and language, including a requirement that the U.S. must remove all existing tariffs for any deal, it also contains some interesting insights into China’s thinking. At the same time, additional levies by Beijing on the majority of U.S. imports on a $60 billion target list took effect on June,1, in response to Washington's move this month to slap further tariffs of up to 25% on $200 billion of Chinese goods.
A Reuters survey showed Brent crude prices are likely to hold near $70 a barrel for the rest of the year as elevated supply risks in the Middle East offset risks to demand. Top oil exporter Saudi Arabia's increased output in May was not enough to compensate for lower Iranian exports. OPEC is expected to meet in late June. At the beginning of the year, OPEC and allies agreed to cut production by 1.2 million bpd.
U.S. production has offset that decline, as output returned to a record 12.3 million barrels per day, and as U.S. crude stocks fell less than expected last week, according to weekly figures.
At the same time U.S. energy firms increased the number of oil rigs operating for the first week in four, adding three oil rigs, bringing the total count to 800. That compares with 861 rigs operating during the same week a year ago. But in May the rig count was reduced for the sixth straight month as drillers cut the number of rigs operating by five.
U.S. crude oil production rose 241,000 barrels per day (bpd), or 2.1%, in March to 11.905 million bpd, just below its record high, the Energy Information Administration (EIA) said in its monthly production report.
We expect bunker prices will continue to fall today: 8-13 USD down for IFO, 15-20 USD down for MGO.