MABUX: Bunker market this morning, Apr.25.

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) continued upward trend on Apr.24:

380 HSFO - USD/MT - 433.36(+5.15)
180 HSFO - USD/MT - 481.71(+5.35)
MGO - USD/MT - 663.43(+3.43)

Meantime, world oil indexes changed irregular on Apr.24 after data showed U.S. crude stockpiles surged to their highest levels since October 2017, countering fears of tight supply resulting from OPEC output cuts and U.S. sanctions on Venezuela and Iran.

Brent for June settlement increased by $0.06 to $74.57 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June delivery lost $0.41 to $65.89 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.68 to WTI. Gasoil for May delivery dropped by $4.00.

Today morning oil indexes are steady.

U.S. crude inventories rose 5.5 million barrels last week, far more than analysts’ forecast of an increase of 1.3 million barrels. Crude output in the United States, which turned into the world’s top producer last year, last week edged back to its record high at 12.2 million barrels per day while net imports jumped 900,000 bpd. However, refinery utilization rates rose to 90.1 percent of total capacity, their highest since early February.

Goldman Sachs acknowledged the upside risk to oil prices from Iran sanctions, but nonetheless stuck with its second quarter forecast for Brent to trade within a $70-$75 per barrel range. The investment bank continues to see limited upside because of the high uncertainty whether OPEC and its Russia-led non-OPEC allies will extend their production cut pact after June this year. As per Goldman, the U.S. maximum pressure to choke off all Iranian oil sales is making the OPEC+ pact even more vulnerable to break-up than before, because the U.S. appears certain that Saudi Arabia and the United Arab Emirates (UAE) will offset lost Iranian barrels.

International Energy Agency (IEA) reported OPEC’s spare capacity has reached 3.3 million barrels per day. As per IEA, the global oil markets are now adequately supplied with plenty of spare capacity to make up for any gaps in oil supplies. The IEA cautioned, however, that global economic growth is still fragile, and urged oil consumers and producers to take steps to avoid higher oil prices that will prove painful to all alike.

Trump surprised the oil market on Apr.22, announcing that he would let U.S. sanctions waivers expire at the end of the month. The eight countries granted six-month waivers last year had hoped to obtain extensions, but the Trump administration has opted for maximum pressure on Iran. However, it may also mean maximum pressure on the oil market if Iran loses a significant portion of its oil exports.

The White House also said that Saudi Arabia and the UAE have agreed to offset lost barrels from Iran, although Saudi Arabia was more measured in its response, saying only that it would add supply if needed. In fact, Saudi Arabia could add a few hundred thousand barrels per day above current levels and still keep output below its ceiling as part of the OPEC+ deal, but that may not be enough to compensate for outages in Iran, which could be significant.

The two top buyers of Iranian oil (China and India) may follow U.S. sanctions. China, which imports approximately 500,000 bpd (barrels per day), will make considerable cuts in the near term. For Beijing, securing the trade agreement with the U.S. is the top priority, and China will not link Iran oil imports to the trade talks. After all, the whole point of the U.S. campaign is to take Iranian oil exports to zero, down from roughly 1.3 million bpd in March.

We expect bunker prices will not have any firm trend today and may change irregular in a range of plus-minus 1-3 USD.