MABUX: Bunker Market this morning, July 09
The Bunker Review was contributed by Marine Bunker Review
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 July, 08:
380 HSFO - USD/MT 424.44 (+4.21)
180 HSFO - USD/MT 461.93 (+4.26)
MGO - USD/MT 652.71 (+2.86)
Meantime, world oil indexes demonstrated slight irregular changes on July, 08 as tensions over Iran's nuclear program countered concerns about whether slowing global economic growth would hit oil demand.
Brent for September settlement declined by $0.12 to $64.11 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery rose by $0.15 to $57.66 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 6.45 to WTI. Gasoil for July delivery increased by $2.50.
Today indexes fall amid concerns of weakening global demand.
Oil prices are being pressured by ongoing worries about demand as the U.S.-China trade war, heading into its second year, dampens prospects for global economic growth, which strongly impacts oil demand growth. The countries are the world's two largest oil consumers. Japan's core machinery orders fell by the most in eight months, in a sign the global trade tensions are taking a toll on corporate investment. Japanese government figures today also showed that real wages in the country fell for a fifth straight month. The country is the fourth-largest crude user in the world.
Meanwhile, U.S. Federal Reserve Chair Jerome Powell will testify before Congress on monetary policy and the state of the U.S. economy on July,10-11. Markets will be looking to find out if Powell is still leaning toward a rate cut after the latest U.S. jobs report for June suggested the economy may be too strong to justify an easing.
Tension in the Middle East remained in focus after Iran admitted over the weekend that it had increased uranium enrichment beyond the purity threshold agreed in a nuclear deal. Speaking on July,7 U.S. President Donald Trump warned that Tehran to be careful on the decision which he claims to be a step towards the development of nuclear weapons.
In addition, The Government of Gibraltar has confirmed that the Iranian supertanker allegedly on its way to Syria was fully laden with 2 million barrels of crude oil. The Panamanian-flagged Grace 1, which was seized on July,4 by the British Royal Marines, was assumed to be carrying crude oil, but some raised doubts. Iran denies that the tanker was on its way to Syria, in defiance of EU sanctions against Syria, and has likened the rather dramatic seizure—reportedly done at the behest of the United States—to “an act of piracy”. Iran alleged on Monday that it is under no obligation to adhere to EU sanctions. Despite some setbacks, Iran remains hopeful that its oil exports will improve, although its oil exports have fallen to below 300,000 bpd–lower than Iran may have anticipated since the sanctions went into effect.
Meanwhile, Goldman Sachs said growth in U.S. shale production was likely to outpace that of global demand at least through 2020, limiting gains in oil prices despite output curbs led by OPEC.
OPEC has asked on Monday for a timely settlement to the tensions that have flared up between the United States and Iran and Venezuela. Iran and Venezuela, both founding members of OPEC, are both exempt once again from the production cut extensions that the cartel announced last week, and will remain exempt for as long as they remain under sanction.
But while the two countries combined seemingly did OPEC a favor by taking more than 2.6 million barrels of crude oil per day out of the market within that time frame, the tensions in the Persian Gulf and the dire situation in Venezuela are creating a market that OPEC is finding it difficult to both predict and manage.
We expect bunker prices to demonstrate slight irregular changes today: US$ 1-3 down for IFO, US$ 1-3 up for MGO.