MABUX: Bunker market this morning, Dec 04
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) rose on December 03:
380 HSFO: USD/MT – 335.62 (+3.93)
180 HSFO: USD/MT – 379.42 (+3.75)
MGO: USD/MT – 666.36 (+2.47)
Meantime, world oil indexes changed insignificant and irregular on Dec.03 as expectations of output cuts from OPEC and allied producers brought prices back up after they slid briefly following comments from U.S. President Donald Trump that a trade deal with China may be delayed.
Brent for February settlement decreased by $0.10 to $60.82 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery rose by $0.14 to $56.10 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.72 to WTI. Gasoil for December delivery lost $5.00.
Today morning oil indexes continue slight upward evolution.
Concerns about the inability of the United States and China, the world’s two biggest oil users, to reach a preliminary deal to resolve their 17-month trade dispute also weighed on oil prices. A senior adviser to President Donald Trump said a U.S.-China trade deal was still possible before the end of the year, adding that the first phase of the agreement was being put to paper, but the talks have been dragging on for weeks now. Meantime, President Trump in turn said a U.S.-China trade agreement might have to wait until after next November’s presidential election.
Russia is the second-largest producer and the largest exporter of natural gas in the world and the country’s most important customers are in Europe where the bulk of its exports are consumed. The completion of the Power of Siberia pipeline (the official opening of the was on December 2nd) , however, could be a pivotal moment for Moscow as it reduces its reliance on traditional customers in the West. Besides Russia’s relations with Europe, the completion of the pipeline could also affect the import of LNG into China and potentially the trade deal between Beijing and Washington. At the moment is seems that in the short to medium-long term a significant part of China’s gas demand will be supplied by Gazprom. Siberian gas will most likely replace LNG in northeastern China. Several Chinese importers have already hinted that they are thinking of selling LNG cargoes on the spot market as they can buy cheaper piped gas.
Ecuador may renege on its decision to quit its OPEC membership, which was supposed to take effect January 1, 2020. Ecuador had announced its decision to quit the oil cartel in earlier October, at a time when the country declared a state of emergency as violent protests erupted over the end of fuel subsidies. Its membership cancellation would have saved Ecuador around $2 million dollars in the form of an OPEC membership fee.
After a decade of unprecedented growth and seemingly endless investments, the Great American Shale Boom is slowing down now and this could have some grave consequences both the industry and the financial markets. A total of 32 oil and gas drillers have filed for bankruptcy through the third quarter, with the total number of bankruptcy filings since 2015 now clocking in at more than 200. Unlike Phase 1 of the oil bust that featured shale production declining due to global price collapse, the current slowdown is being driven partly by industry-wide core operational issues, including declining production due to wells being drilled too close to one another as well as production sweet spots running out too soon. Yet, the most important underlying theme precipitating the collapse is a growing financial squeeze as banks and investors pull in the reins and demand that shale drillers prioritize profitability over production growth.
The survey showed that the vast majority of ships in the German fleet will run on the new sulphur-reduced fuel in response to IMO 2020. 81% of the companies surveyed will be using 0.50% very low sulphur fuel oil (VLSFO), while 11% will take advantage of their scrubber installations to use high sulphur fuel oil (HSFO). Around 6% said they will be using ‘other fuels, such as those prescribed already since 2015 for Emission Control Areas in the North Sea and the Baltic Sea – fuels with an even lower sulphur content of 0.10%’. One assumes that this includes low sulphur marine gasoil (MGO). Around 2% of the ships in the German fleet will already be operated using LNG after 2020, according to the survey. The survey respondents indicated that ‘the greatest challenge’ will be technical problems encountered during operations in the future, as well as the cost of the new fuel, and the issue of cost compensation by third parties, in particular customers.
The American Petroleum Institute (API) has estimated a crude oil inventory draw of 3.72 million barrels for the week ending November 28, compared to forecast expectations of a 1.798-million-barrel draw in inventory—the biggest draw since September. Last week saw a build in crude oil inventories of 3.639 million barrels, according to API data. The EIA’s estimates, however, reported a smaller build of 1.6-million barrels for that week. US crude oil production as estimated by the Energy Information Administration showed that production for the week ending November 22 climbed to another brand new high for the week of 12.9 million bpd—more than 1 million bpd over the daily average production at the beginning of the year.
We expect bunker prices will not have any firm trend today with possible fluctuations in a range of plus-minus 1-4 USD.