MABUX: Bunker market this morning, July 04
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 upward trend on July 03:
380 HSFO – USD/MT – 414.81 (-5.65)
180 HSFO – USD/MT – 451.86 (-5.19)
MGO – USD/MT – 651.29 (-8.59)
Meantime, world oil indexes changed irregular on Jul.03 after a steep fall in the previous session, supported by extended output cuts by OPEC and its allies despite concerns that a slowing global economy could crimp demand.
Brent for September settlement increased by $1.42 to $63.82 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery rose by $1.09 to $57.34 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $6.48 to WTI. Gasoil for July lost $3.75.
Today morning oil indexes have turned into slight downward evolution.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.1 million barrels from the previous week. At 468.5 million barrels, U.S. crude oil inventories are about 5% above the five year average for this time of year. Last week, the EIA said U.S. crude oil production had surged to 12.16 million bpd during May, a record-high cementing the country’s place as the world’s top crude oil producers. While in line with the Trump administration’s energy dominance strategy and in favor of drivers, the news is not particularly good for the companies that made this level of production possible. Rising U.S. production will continue to keep a lid on international oil prices.
As expected, OPEC+ agreed to extend the production cuts, this time for nine months, pushing the 1.2 million bpd deal to the end of the first quarter of 2020. At the same time, some restless OPEC members balked at what has largely become a decision-making process between only Saudi Arabia and Russia. The extension was largely assumed by traders, so there was little impact on oil prices.
OPEC+ also agreed on a charter that would allow them to continue to cooperate beyond the nine-month deal. OPEC Secretary-General said the cooperation with the select non-OPEC countries could last for “eternity.” Also, Saudi Arabia said it would measure its success against an inventory target, using the 2010-2014 average rather than the trailing five-year average. That is a more ambitious objective, and will ultimately mean they seek to drain global inventories to a lower level.
Iran said that the EU’s effort to setup a financial vehicle to continue business with Iran is insufficient if it does not allow for oil sales. As per Iran, a European mechanism to shield some trade from crippling U.S. sanctions won’t be useful if it doesn’t allow for oil sales. The three European nations that remain party to the 2015 nuclear accord have been scrambling to find ways to skirt the sanctions the Trump administration imposed after it quit the pact last year. Iran has given the Europeans until July 7 to deliver, saying it will breach additional restrictions on its nuclear activities if they don’t.
Russia’s oil production has stayed below its production limit as part of the OPEC+ deal, largely because of the lingering effects of the Druzhba pipeline contamination crisis. In June, Russia averaged 11.155 million bpd, or about 35,000 bpd below its agreed upon limit.
China is allowing additional crude oil import quotas to predominantly private oil refiners. The additional quotas for 33 private refiners and 10 government or province-run refiners allow those 43 refineries to import an additional 56.85 million tons of crude oil for the rest of this year, bringing the total volume of allowed import quotas issued this year to 151 million tons, equivalent to 3.02 million barrels per day. Independent refiners, also referred to as ‘teapots’, have been instrumental in China’s oil demand jump over the last four years, driving up global demand as well and directing oil price predictions from analysts and the oil industry.
Venezuela exported 1.1 million bpd of crude oil and refined oil products in June, up by 26 percent from May, thanks to higher shipments under oil-for-loan deals with China. China accounted for 59 percent of Venezuela’s oil shipments last month, with India and Singapore a distant second and third, with 18 percent and 10 percent of Venezuela’s oil exports, respectively. Venezuela had to seriously reshuffle its crude oil and oil products export destinations earlier this year after the U.S. essentially prohibited Venezuelan oil imports to America.
IMPORTANT NOTICE: MABUX HAS STARTED PUBLISHING PRICE INDICATIONS FOR TEST LOTS OF VLS FO (0.5%) TRADING RECENTLY AT ARA, SINGAPORE AND FUJAIRAH. THE LIST OF PORTS WILL BE SUPPLEMENTED AS SOON AS THE AVAILABILITY OF THE CONVENTIONAL BLEND VLS FO EXPANDS. VISIT www.mabux.com FOR MORE DETAILS.
We expect bunker prices may change irregular today in a range of plus-minus 3-5 USD.