MABUX: Bunker market this morning, Aug 09

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued steep downward evolution on Aug.08:

380 HSFO - USD/MT – 362.70 (-22.66)
180 HSFO - USD/MT – 406.24 (-20.40)
MGO - USD/MT – 626.44 (-9.39)

Meantime, world oil indexes rebounded on Aug.08 after plunging almost 5% overnight on rising crude stockpiles.

Brent for October settlement increased by $1.15 to $57.38 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September delivery rose by $1.45 to $52.54 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.84 to WTI. Gasoil for August gained $9.00.

Today morning oil indexes continue slight upward movement.

U.S. Energy Secretary Rick Perry and his Saudi counterpart Khalid al-Falih accused Iran of trying to destabilize global oil markets during a recent meeting. Both parties reaffirmed that the United States and Saudi Arabia will continue to work together to ensure that world oil markets remain well supplied to offset disruptions, especially in light of Iran’s “aggressive” efforts to destabilize them. Despite the bilateral hostility, however, Saudi Arabia recently returned to Iran a vessel that had docked at the port of Jeddah in May.

On Aug.05, China’s yuan weakened to around 7 to 1 to the U.S. dollar – the weakest since the global financial crisis in 2008. The sudden weakening of the yuan puts tremendous pressure on other emerging markets. Two days after the yuan dropped, India, New Zealand and Thailand quickly moved to cut their interest rates: a defensive action by countries seeking to protect themselves from the collateral damage of rising global trade tensions, amid weakening domestic growth. There was also a direct effect of the currency conflict on oil demand. A stronger dollar makes oil more expensive to the rest of the world: oil tends to move inversely to the dollar.

Chinese crude oil imports added 14 percent in July as refineries started ramping up processing rates after profit margins began improving thanks to stronger fuel demand.  The average daily intake was 9.66 million barrels, Reuters reports, with fuel exports rebounding as well last month, up by as much as 20 percent despite excess supply. The July uptick in imports, however, may soon reverse: refineries will reduce their throughput during the current quarter ahead of the country’s National Day holiday that begins in October.

The world’s biggest independent commodity trader, Vitol, has been revising down its global oil demand growth estimates and now sees growth at just 600,000 bpd-650,000 bpd this year. Next year, demand growth is set to pick up to around 800,000 bpd, which has much lower projections about demand growth than the current forecasts of the International Energy Agency (IEA), OPEC, or the Energy Information Administration (EIA). According to the most recent demand and supply estimates, a larger oil glut is looming in 2020, with non-OPEC supply growth picking up pace next year and demand growth seen faltering.

U.S. crude oil stockpiles rose last week after nearly two months of declines as imports jumped to their highest since January. Crude inventories rose 2.4 million barrels in the week to Aug. 2, compared with forecasts for a decrease of 2.8 million barrels. At 438.9 million barrels, U.S. crude oil inventories were about 2% above the five-year average for this time of year. Crude production grew 100,000 bpd to 12.3 million bpd, just under its weekly record high at 12.4 million hit in May. Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell 1.5 million barrels.

We expect bunker prices may turn into slight upward correction today in a range of plus 3-7 USD.