MABUX: Bunker Market this morning, June 27
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) demonstrated upward changes on June. 26
380 HSFO - USD/MT 409.40 (+3.70)
180 HSFO - USD/MT 448.56 (+2.99)
MGO - USD/MT 652.81 (+3.08)
Meantime, world oil indexes also demonstrated sharp upward changes on June. 26
Brent for August settlement increased by $1.44 to $66.49 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery rose by $1.55 to $59.38 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 7.11 to WTI. Gasoil for July delivery increased by $10.25.
Oil prices jumped after the U.S. government reported a crude stockpile draw four times above expectations, the biggest weekly inventory drop since September 2016. The EIA said crude oil inventories plummeted by 12.79 million barrels the last week, against forecasts for a stockpile draw of 2.54 million barrels. In the previous week to June 14, crude inventories declined by 3.11 million barrels, after a net build of nearly 20 million barrels over five weeks.
An additional factor affecting fuel prices is Philadelphia Energy Solutions’ decision to permanently shut its oil refinery in Philadelphia after a massive fire last weekend.
The G20 gathering will be in the spotlight for oil markets as Russian President Vladimir Putin meets Saudi Crown Prince Mohammed Bin Salman. They will likely discuss whether and how to extend the current production cut agreement between OPEC and other producers, of which Russia is by far the largest.
Moscow had convinced OPEC to delay the meetings initially scheduled for June 25-26 to July 1-2 in order to have time for discussion at the G20.
While waiting for a confirmation of an extension of output cuts, U.S. crude has gained more than 10% since mid-June as escalating tensions between the U.S. and Iran countered the ongoing Sino-U.S. trade conflict as the principal short-term price driver.
Today indexes fall as market await the G20 summit in Japan and a meeting of OPEC and other oil producers to decide on an extension of output cuts.
The market has concerns that a hoped-for breakthrough on trade at the G20 may not eventuate and some nervousness about continued output cuts were crimping follow-through buying. U.S. President Donald Trump will meet with Chinese President Xi Jinping at the Group of 20 summit that starts on June 28 in Osaka, Japan to seek a breakthrough in negotiations to end a trade war that has been hitting global economic growth. At the same time, Trump said on June,26 that a deal was possible but also spoke of a Plan B that would involve reducing business ties with China.
Almost immediately after the G20 summit ends on Saturday, the Organization of the Petroleum Exporting Countries (OPEC) meets on July,1 to discuss an extension of production cuts to support prices. The day after that OPEC members meet with other producers including Russia in a grouping known as OPEC+, which agreed in December to reduce supply by 1.2 million barrels per day from Jan. 1. The agreement is due to expire on June 30.
We expect that bunker prices will demonstrate upward changes today: 5-8 USD up for IFO, 8-10 USD up for MGO.