MABUX: Bunker market this morning, May 15

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) changed insignificant and irregular on May 14:

380 HSFO - 414.86 (-0.64)
180 HSFO - USD/MT - 462.57 (-0.36)
MGO - USD/MT - 660.50 (+1.86)

Meantime, world oil indexes changed irregular on May 14 after top exporter Saudi Arabia said explosive-laden drones launched by a Yemeni armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco, although this was tempered somewhat by the escalating China-US trade war.

Brent for July settlement increased by $1.01 to $71.24 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June delivery rose by $0.74 to $61.78 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 9.46 to WTI. Gasoil for June lost $3.00.

Today morning oil indexes have turned into slight downward evolution.

Saudi Arabia said on May 13 that two Saudi oil tankers were among vessels attacked off the coast of the United Arab Emirates. The UAE in turn reported that four commercial vessels were attacked near Fujairah, one of the world’s largest bunkering hubs. The port lies near the Strait of Hormuz, one of the world’s most important oil export waterways. Iran’s foreign ministry called the incidents worrisome and dreadful and asked for an investigation into the matter.

However, yesterday Saudi Arabia reported armed drones had struck two oil pumping stations in the kingdom. The attack caused a fire and minor damage at one pump station, but did not disrupt oil production or exports of crude and petroleum products. Saudi officials said the drone attack and Sunday’s sabotage of four vessels, including two Saudi tankers, off Fujairah emirate, a major bunkering hub, threatened global oil supplies.

Yemen’s Houthi group, which has been at war with the kingdom for over four years, said it had launched drone attacks on Saudi installations, without identifying the targets or time of the attacks.
 
Another potential upward driver at the moment is the threat of a direct Iran-U.S. confrontation. Taking into account the presence of hardline fundamentalist groups in the area, Tehran can mount a strong force without officially taking part in attacks against the U.S. The same could be done in Syria or Yemen, targeting U.S forces and its allies in the area. By using Hezbollah or Hamas, Tehran would even be able to instigate a full-scale regional war, forcing Israel to take part in the conflict. Proxy wars in several countries in the Middle East could have a harmful effect on global oil and fuel markets. Any disruption to oil flows cannot be countered by increased OPEC output or even U.S. shale oil. The market may seem well supplied, and inventories are still at relatively high levels, but this reality could soon change.

The trade conflict between Washington and China pushes oil/fuel prices down.
The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019. The trade turmoil has prompted hedge funds to cut their bullish wagers on U.S. crude oil to the lowest level in a month and raised their bets on Brent crude to the highest in nearly seven months.

Separately, in an early indicator of future output, U.S. energy companies last week reduced the number of oil rigs operating for the third time in four weeks, cutting them by two and bringing the count down to 805.

A collision between an oil tanker and a tug boat in the Houston Ship Channel on May 10 caused a capsizing and an oil derivative leak. The tug boat, according to reports, was moving two barges, one of which capsized as a result of the collision. The Houston Ship Channel was closed after the collision but was reopened May 12: the water was reportedly not dangerous for humans even though there had been several reports about dead animals in the vicinity. The cause of the collision is yet to be established but whatever it is, the cost for Houston Port will be high. The port is one of the busiest in the United States and every hour it remains closed carries a hefty price tag.

The American Petroleum Institute (API) reported a large surprise build in crude oil inventory of 8.6 million barrels for the week ending May 10, coming in significantly over analyst expectations of a 2.125-million-barrel drawdown in inventories. Including this week’s data, the net build is now 29.52 million barrels for the 20-week reporting period so far this year, using API data. The U.S. Energy Information Administration report on crude oil inventories is due to be released later today.

We expect bunker prices may slightly rise today in a range of plus 3-5 USD.