MABUX: Bunker market this morning, July 31

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 on July 30:

380 HSFO – USD/MT – 417.88 (-0.14)
180 HSFO – USD/MT – 452.83 (-0.50)
MGO – USD/MT – 656.36 (-0.16)

Meantime, world oil indexes continued upward trend on Jul.30 on optimism the U.S. Federal Reserve will this week cut interest rates for the first time in more than 10 years, supporting fuel consumption in the world’s biggest oil user.
 
Brent for September settlement increased by $1.01 to $64.72 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September delivery gained $1.18 to $58.05 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $6.67 to WTI. Gasoil for August added $5.50.

Today morning oil indexes continue slight upward evolution.

OPEC could roll over its regime of production cuts until the end of 2020 as demand from the top oil-consuming countries such as the US, China and India continues to slow. Whereas in 2019, the above three countries’ contribution to yearly demand growth is expected to make up 67 per cent of the total, this will decline to 56 per cent in 2020. It is also expected that US oil production will rise to 13 million barrels per day (bpd) early next year from the 12 million bpd level reached recently, adding to the downward pressure on oil prices. Based on current OPEC demand and non-OPEC supply forecasts to 2020, it is likely that another roll-over in output will be required until the end of next year, and that the level of agreed output may need to be even lower than prevailing levels.

While the Bank of Japan held off on expanding stimulus on Jul.30, it signaled its readiness to do so “without hesitation” if a global slowdown jeopardizes the country’s economic recovery.

U.S. central bankers began their two-day on Jul.30 and are expected to lower borrowing costs for the first time since the depths of the financial crisis more than a decade ago. Economic growth in the United States slowed less than expected in the second quarter, strengthening the outlook for oil consumption but, elsewhere, disappointing economic data has increased concerns about slower growth.

U.S. and Chinese negotiators also meet this week for their first in-person talks since agreeing to a truce to their trade dispute at a Group of 20 meeting last month. However, expectations for progress during the two-day Shanghai meeting are low, so officials and businesses hope Washington and Beijing can at least detail commitments for “goodwill” gestures and clear the path for future negotiations.

Singapore's Energy Market Company will stop producing and publishing price indices for liquefied natural gas (LNG) in the city-state known as “Sling”. It is expected that Sling - short for SGX LNG Index Group - indices will be published until Oct. 31, this year, “provided there is sufficient data for an accurate and robust index to be published".

Intercontinental Exchange, Inc. (ICE) launched a further nine Marine Fuel 0.5% futures contracts in advance of the implementation of the 0.5% sulphur cap by the International Maritime Organization (IMO) in January 2020. ICE’s new futures contracts expand the existing suite of Marine Fuel contracts launched in February 2019 and will settle against the S&P Global Platts physical Marine Fuel 0.5% assessments. The IMO regulation limits sulphur emissions from shipping bunker fuel, requiring ships to use fuel oil with a maximum sulphur content of 0.5% outside designated emission control areas.

The American Petroleum Institute (API) reported a crude oil inventory draw of 6.024 million barrels for the week ending July 25, compared to analyst expectations of a much smaller, 1.818-million barrel draw. The inventory draw this week compares to last week’s massive draw of 10.961 million barrels in what was the largest inventory draw this year, according to the API. A day later, the EIA confirmed an inventory drawdown of 10.8 million barrels. The U.S. Energy Information Administration report on crude oil inventories is due to be released at its regularly scheduled time later today.

We expect bunker prices may turn into slight upward trend in a range of plus 3-6 USD.