Bunker market prices still lack any clear direction, expert says
The Bunker Review is contributed by Marine Bunker Exchange
Global fuel market did not have any firm trend during the week. Fuel prices are still being supported by speculation that the global surplus will ease as U.S. output declines and major producers including Saudi Arabia and Russia discuss capping output. Iran has agreed to attend production-freeze talks on April 17 in Doha, Qatar without joining the proposal to freeze production.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) in the period Mar. 25 – 31 insignificantly declined:
380 HSFO - down from 164,64 to 163,50 USD/MT (-1,14)
180 HSFO - down from 208,57 to 206.71 USD/MT (-1,86)
MGO - down from 401,79 to 393.43 USD/MT (-8,36)
Members and non-members from the Organization of the Petroleum Exporting Countries (OPEC) are due to meet in the Qatari capital Doha on April 17 to discuss the plan. So far, 10 countries have confirmed their attendance at the meeting, with only OPEC-member Libya saying it will not attend.
U.S. data last week showed inventories rose 2.3 million barrels (that was less than the 2.6-3.3 million-barrel build forecast had expected). Crude production fell by 16,000 barrels a day to 9.02 million, the lowest since November 2014. Rigs targeting oil in the U.S. also fell by 15 to 372, the lowest since 2009,. More than 150 have been parked since the start of the year. U.S. refineries operated at 90.4% of capacity last week. U.S. shale oil production in April is expected to record its second-largest monthly decline on record at around 106,000 barrels per day.
Federal Reserve Chair Janet Yellen reasserted this week the central bank’s gradual approach to raising interest rates. However the regulator remains wary of raising rates amid threats to American growth from a slowing global economy and so it would act cautiously. Yellen indicated that Fed members take into account the global context more than regional officials. A June rate hike would be difficult as global financial turmoil earlier this year affects the real economy with a time lag. The chance of a move by the end of 2016 has declined to 64 percent, from 73 percent at the end of last week.
China's refined fuel stocks at the end of February were up 17.3 percent from the pre-vious month to their highest level in four years, while commercial crude oil stocks were up 1.1 percent.
There are also signs that India may replace China as the center of the world’s oil demand growth as its economy expands faster than any other major country. The economy is estimated to grow 7.6 percent in the year ending this month, the highest among emerging markets. Forecast predicted India will consume 4.2 million barrels a day of oil this year, surpassing Japan’s 4.1 million barrels. The nation’s consumption grew by 300,000 barrels a day last year, double the average rate in the previous decade.
All in all, the fundamentals on the world fuel market remain unchanged while the forthcoming meeting (Apr.17) to discuss capping output may have some potential to set up firm support to the fuel prices. We do not expect any drastic changes in bunker prices next week: irregular fluctuations will continue.
*MGO LS
All prices stated in USD / Mton
All time high Brent = $147.50 (July 11, 2008)
All time high Light crude (WTI) = $147.27 (July 11, 2008)
