MABUX: Bunker Market this morning, July 05

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 July, 04:

380 HSFO - USD/MT 417.87 (+3.13)
180 HSFO - USD/MT 455.52 (+3.73)
MGO - USD/MT 649.67 (-1.19)

Meantime, world oil indexes also changed irregularly on July, 04.

Brent for September settlement declined by $0.52 to $63.30 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for August delivery fell by $0.54 to $56.80 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 6.50 to WTI. Gasoil for July delivery increased by $1.00.

Today indexes fall as concerns over the outlook for global economic growth outweighed elevated tensions in the Middle East that could disrupt supply routes and send prices higher.

Weekly data from the U.S. Energy Information Administration showed a much smaller than expected decline in U.S. crude inventories, casting doubt on demand despite it being in the middle of the U.S. driving season. New orders for U.S. factory goods fell for a second straight month in May, government data showed on July,04, stoking economic concerns.

The U.S. Energy Information Administration on July,03 reported a weekly decline of 1.1 million barrels in crude stocks, much smaller than the 5 million barrel draw reported by the American Petroleum Institute earlier in the week. That suggests oil demand in the United States, the world's biggest crude consumer, could be slowing amid signs of a weakening economy.

The trade truce between the U.S. and China did little to resolve concerns that an actual deal will be forthcoming. Although White House Economic Adviser Larry Kudlow said the bilateral talks between both sides top negotiators would resume next week, he had few further details to add.

Countering the downward pressure, ongoing tensions in the Middle East also offered some support. British Royal Marines seized a giant Iranian oil tanker in Gibraltar on July,04 for trying to take oil to Syria in violation of EU sanctions. This can be a dramatic step that drew Tehran's fury and could escalate its confrontation with the West.

China plans to launch a low-sulfur bunker fuel oil futures contract in a bid to raise its pricing power in the world’s maritime fuel oil market. The Shanghai Futures Exchange (ShFE) looks to launch the futures contract open to foreign investors and traders by the end of this year. The shipping industry is preparing for a major disruption of the types of fuels it will be using as early as the beginning of 2020, when stricter regulations for the sulfur content of fuel come into force. According to the new rules by the International Maritime Organization (IMO), only 0.5-percent or lower sulfur fuel oil should be used on ships beginning January 1, 2020, unless said ships have installed the so-called scrubbers—systems that remove sulfur from exhaust gas emitted by bunkers. As the starting date for the new low-sulfur rules approaches, China wants to gain more influence on the pricing of those fuels on the global market and become a key supply center of low-sulfur bunker fuel oil. Chinese companies are preparing to produce more low-sulfur fuel oil ahead of the 2020 shipping regulation change.

We expect bunker prices to demonstrate slight irregular changes today: 1-3 USD down for IFO, 1-3 USD up for MGO.