MABUX: Bunker Market this morning, June 13
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) declined on June. 12
380 HSFO - USD/MT 393.86 (-2.85)
180 HSFO - USD/MT 433.29 (-2.57)
MGO - USD/MT 644.40 (-0.05)
Meantime, world oil indexes also demonstrated downward changes on June. 12 amid buildup in U.S. crude stockpiles and worries about lower demand growth
Brent for August settlement decreased by $2.320 to $59.97 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for July delivery fell by $2.13 to $51.14 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.83 to WTI. Gasoil for July delivery decreased by $8.50.
Today indexes are stable.
The U.S. Energy Information Administration (EIA) on June,12 reported domestic crude stockpiles rose unexpectedly for a second week in a row, climbing 2.2 million barrels last week. It was forecasted a decrease of 481,000 barrels. At 485.5 million barrels, U.S. commercial stocks were at their highest since July 2017 and about 8% above the five-year average for this time of year. The crude-inventory rise came despite refinery runs at around 93% of capacity last week, nearing the season norm of 95% and above.
At the same time the EIA data showed that crude imports have also been heavy at more than 7 million barrels the past two weeks, as refiners appeared to take advantage of the market’s recent decline to lock in cheaper supply. The trouble is they weren’t making enough gasoline to offset the higher imports, as refining margins had also been weakened by the market’s drop.
Uncertain macroeconomic outlook and volatile oil production from Iran and others could lead OPEC to roll over supply cuts. With the next meeting of OPEC set for the end of June, the market is looking to whether the world's major oil producers will prolong their supply cuts. The energy minister of the United Arab Emirates, Suhail bin Mohammed al-Mazroui, said on June,12 that OPEC members were close to reaching an agreement on continuing production cuts.
Weighing further on the market are fears that demand for energy will slow as the U.S.-China trade war threatens to push the world to the brink of recession. Over the past two weeks, several Wall Street investment banks have warned that the escalating U.S.-China trade war raises the possibility of an economic slowdown and low oil demand growth. Some banks have already cut their oil demand growth estimates for this year. The last month, fears of a global economic slowdown, and even recession, overtook fears that oil supply could become too tight with the U.S. sanctions on Iran and Venezuela, a fragile security situation in Libya, and heightened tensions in the Middle East. The EIA already cut its forecasts for 2019 world oil demand growth
At the same time, there is a possibility of a truce between the Trump administration and Tehran that could put Iranian oil back on the market. Iran’s oil exports are about a million barrels below capacity now because of U.S. sanctions. Japanese Prime Minister Shinzo Abe, Trump’s chosen emissary for a peace deal with Iran, will be in Tehran until June,14 for talks with President Hassan Rouhani and the Islamic Republic’s Supreme Leader Ayatollah Seyyed Ali Khamenei. If the Iranians decide to hold talks, the president might even decide to suspend the sanctions as a goodwill gesture for the negotiations to begin.
We expect bunker prices to demonstrate downward changes today: USD 9-12 down for IFO and USD 6-8 down for MGO.