MABUX: Bunker Market this morning, March 29
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) demonstrated irregular changes on Mar. 28
380 HSFO - USD/MT 414.00 (+1.71)
180 HSFO - USD/MT 461.00 (+1.36)
MGO - USD/MT 633.64 (-0.50)
Meantime, world oil indexes demonstrated slight downward changes on Mar. 28
Brent for May settlement decreased by $0.01 to $67.82 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May delivery fell by $0.11 to $59.30 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.52 to WTI. Gasoil for April delivery declined by $8.25.
Today oil indexes are rising, pushed up by ongoing supply cuts led by producer club OPEC and U.S. sanctions against Iran and Venezuela.
Oil prices have been supported for much of 2019 by the efforts of OPEC and non-affiliated allies like Russia, who have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year to prop up markets. OPEC+ are meeting in June to discuss whether to continue withholding supply or not. OPEC's de-facto leader Saudi Arabia favors cuts for the full year while Russia, which only reluctantly joined the agreement, is seen to be less keen to keep holding back beyond September.
However, the OPEC+ cuts are not the only reason for rising oil prices, U.S. sanctions on oil exporters and OPEC members Iran and Venezuela as reasons for the surge .
On top of U.S. sanctions, power cuts have crippled Venezuela’s oil industry. The country’s main oil export port of Jose and four crude upgraders, needed to convert Venezuela’s heavy oil into exportable grades, have been halted since March 25.
U.S. sanctions have also hit Iranian crude exports. In early May, analysts expect the United States will extend some sanction waivers on Iranian oil but might reduce the number of countries receiving them. The 180-day exemptions were granted in November 2018 to eight countries - China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea. The main aim of the Washington is to bring Iranian oil exports to zero.
Despite the surging prices, analysts are expressing concerns about future oil demand amid worrying signs the global economy may move into a recession. Stock markets have been volatile this year amid signs of a sharp global economic slowdown.
Prices are pressured by demand concerns on the back of economic tension linked to the U.S.-Chinese trade war. In a fresh development, China has made unprecedented proposals on a range of issues, including forced technology transfer, as the two sides work to end their protracted dispute. Today U.S. and China resume trade talks in Beijing.
U.S. President Donald Trump sent out on March 28 his second tweet of the year on oil, calling on OPEC to raise production and bring down prices of the commodity. The market initially sunk as much as 1% as the president reignited his battle with OPEC. But by the close, it recovered most of those losses, settling just slightly lower. Trump tweets were among the factors that contributed to last year's 25% crash in oil prices. But compared to his last tweet on oil that pulled crude prices down as much as 3%, market action showed the president may be losing his influence over traders, as well as OPEC.
Expect bunker prices to demonstrate slight downward changes today: difference around 1-3 USD for IFO, 4-7 USD down for MGO.