MABUX: Bunker Market this morning, Nov 07
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) demonstrated irregular changes on Nov.06
380 HSFO - USD/MT 363.21 (-0.14)
180 HSFO - USD/MT 406.85 (-0.63)
MGO - USD/MT 671.29 (+0.53)
Meantime, world oil indexes declined on Nov.6 as U.S. crude stockpiles rose more, that expected.
Brent for January settlement decreased by $1.22 to $61.74 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by $0.88 to $56.35 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.39 to WTI. Gasoil for November delivery declined by $2.75.
Today indexes continue to slide down.
U.S. oil inventories rose much more than expected last week. According to the Energy Information Administration oil stockpiles rose by 7.9 million barrels, compared with expectations for an increase of about 1.5 million barrels.
Beijing and Washington are closing in on a phase one trade deal, although today’s reports said Beijing is trying to push the U.S. to remove more tariffs on Chinese goods as part of the deal.
Both countries have slapped tariffs on each other's goods in a trade war that has dragged on for 16 months. On Wednesday, there was still no indication that negotiators were ready to move Presidents Donald Trump and Xi Jinping from talking phase one to the signing of the agreement
Also weighing on oil prices today were reports that the biggest producers in OPEC+ aren’t pushing for deeper oil-supply cuts when the group meets next month.
At the same time OPEC in this annual report said, that marine fuel regulations on sulfur that go into effect January 1 will have a less disruptive — but still considerable — impact to the oil market than previously feared. Lower expected oil demand growth, a pick-up in the pace of scrubber installations and increases in the availability of compliant fuel will mitigate some of the market stresses. Recent assessments indicate that the global refining system will have sufficient flexibility to address the changes in the maritime sector’s fuel mix. Nevertheless, the impact on high sulfur fuel oil prices, the gasoil/HSFO spread, as well as HSFO-rich crude oil prices, will still be significant, although less severe than previously expected.
The International Maritime Organization will implement rules limiting the sulfur con. OPEC’s outlook forecasts that compliance will be about 85% in 2020, up by about 10 percentage points from last year’s outlook. Compliance will rise to almost 90% by 2024 and to eventual near full compliance.It is also expected 2,500 vessels to have scrubbers installed in 2020, eventually rising to almost 5,500 ships. OPEC estimates that marine HSFO demand will decline from 3 million b/d in 2019 to 1.2 million b/d in 2020 and then recover to about 1.5 million b/d, due to scrubber installations. Diesel demand in the bunker sector is forecast to rise to about 1.5 million b/d in 2020, from about 900,000 b/d currently. Compliant 0.5% sulfur blend fuel will see demand increase to about 1.6 million b/d in 2020, from about 300,000 b/d currently.
The United States will target shipping companies that are in breach of sanctions and aggressively enforce measures across the globe to clamp down on such practices. In one of the biggest sanctions actions taken by the U.S. government since its crackdown on Iranian oil exports, Washington imposed sanctions on Chinese companies in late September for alleged involvement in moving crude oil from Iran. COSCO Shipping Tanker (Dalian), a subsidiary of China’s state-owned shipping group COSCO, was one of the companies blacklisted. Concern over shippers falling foul of U.S. sanctions sent oil freight costs to record highs around the world, adding millions of dollars to the cost of every voyage. Washington has also used sanctions on other countries including Venezuela and North Korea.
We expect bunker prices to demonstrate downward changes today: 3-5 USD down for IFO, 1-3 USD down for MGO.