MABUX: Bunker market this morning, June 21

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 June 20:

380 HSFO – USD/MT 391.95 (+4.02)
180 HSFO – USD/MT – 432.37 (+4.42)
MGO – USD/MT – 643.48 (+4.71)

Meantime, world oil indexes also rose on Jun.20 as official data showed U.S. crude stocks fell more than expected and as OPEC and other producers finally agreed a date for a meeting to discuss output cuts.

Brent for August settlement increased by $2.63 to $64.45 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery rose by $3.10 to $57.07 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 7.38 to WTI. Gasoil for July gained $19.25.

Today morning oil indexes do not have any firm trend so far.

The Energy Information Administration said in its regular weekly report that crude oil inventories decreased by 3.11 million barrels in the week to June 14. That was compared to forecasts for a stockpile draw of 1.08 million barrels after a build of 2.21 million barrels in the previous week.

OPEC and its allies have fixed the date of their upcoming meetings in Vienna for July 1-2. With 11 days left before the OPEC/non-OPEC coalition’s 1.2 million b/d production cut agreement is set to expire at the end of June, several ministers have signaled that an extension is likely, as oil prices have slumped on downbeat global economic forecasts. Under the plan, a nine-country Joint Ministerial Monitoring Committee will meet the morning of July 1, before OPEC convenes that afternoon. The 10 non-OPEC partners led by Russia will join the talks the next day.

Meantime, Gulf OPEC producers will keep their July oil production within their OPEC target despite the current global supply cut pact expiring at end of June. Key OPEC producers Kuwait and the United Arab Emirates are also keeping their output in July within the OPEC target and will not be raising their production, the sources added. The moves indicate that the powerful Gulf oil producers block wants to keep the existing output cut by OPEC unchanged for the second half of the year.

U.S. President Donald Trump recently has called on Saudi Arabia and OPEC to boost output to compensate for the reduction in Iranian oil supply, but Saudi sources say that though the kingdom will always respond to its customers needs, there has been no demand for extra crude to justify them increasing their production.

Iran has said its Revolutionary Guard had shot down a U.S. drone flying over Iranian territory, days after the U.S. accused Iran of shooting down a drone that was flying to the Gulf of Oman following reports of attacks on two tankers. The U.S. central military command had denied there being a drone over Iranian territory at the time. The incidents and the heightened tension between Washington and Tehran do not have much of an effect on oil and fuel prices so far, but this could change. Since these happened near the world’s most important oil flow chokepoint, the Strait of Hormuz, they could have a lasting impact on the price of oil as ship owners, marine brokers, insurers, and reinsurers are already lifting premiums for insuring tankers passing through the region and are charging higher freight rates for shipping oil out of the Middle East.

U.S. President Donald Trump approved military strikes on Friday against Iran in retaliation for the downing of an unmanned $130-million surveillance drone, but pulled back from launching the attacks. However, it is not clear whether attacks on Iran might still go forward. It was not known if the cancellation of strikes had resulted from Trump changing his mind or administration concerns regarding logistics or strategy.

We expect bunker prices will demonstrate firm upward trend today in a range of plus 10-15 USD.