MABUX: Bunker market this morning, Aug 22
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
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 Aug.21:
380 HSFO - USD/MT – 354.33 (-1.43)
180 HSFO - USD/MT – 400.43 (-1.43)
MGO - USD/MT – 637.65 (+1.34)
Meantime, world oil indexes did not have firm trend and changed irregular on Aug.21 after U.S. government data showed a big drawdown in domestic crude stockpiles, but rises in refined product inventories limited price gains.
Brent for October settlement increased by $0.27 to $60.30 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery fell by $0.45 to $55.68 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.62 to WTI. Gasoil for September gained $8.50.
Today morning oil indexes turned into slight downward correction.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.7 million barrels from the previous week. At 437.8 million barrels, U.S. crude oil inventories are about 2% above the five year average for this time of year. The EIA’s latest figure compared with inventory builds for each of the last two weeks. Last week, the authority reported an increase of 1.6 million barrels and the week before that, it estimated a rise of 2.4 million barrels.
The U.S. government extended waivers on sanctions on companies doing business with Huawei, viewed as a conciliatory gesture towards China. Fears of an economic recession seem to have the Trump administration concerned, and top U.S. officials have talked up trade negotiations. The Trump administration is also reportedly exploring a payroll tax amid growing concerns about the economy.
China CNPC, a leading buyer of Venezuelan oil, has halted August loadings following the latest U.S. sanctions on the South American exporter. A CNPC spokesman declined to comment. Most deliveries of Venezuelan oil and refined products to CNPC’s units are intended to monetize billions of dollars lent by China to Venezuela through oil-for-loan pacts. In July, Venezuela exported 563,000 bpd of crude and fuel to China, mostly through CNPC and Russia’s Rosneft. The Trump administration in early August froze all Venezuelan government assets in the United States and U.S. officials ratcheted up threats against companies that do business with Venezuela’s state-run oil company PDVSA.
The Iranian oil carrier Helm, one of the world’s largest crude tankers, signaled distress at on Aug.20, in the Red Sea off the Saudi port of Yanbu. Iran’s tanker fleet is under global scrutiny amid U.S. sanctions seeking to choke off the country’s crude sales. The U.S. failed in efforts to seize a loaded supertanker allegedly bound for Syria that had been blocked in Gibraltar for more than a month. Iranian tankers in response have turned off their satellite transponders intermittently in an apparent attempt to mask their voyages to supply crude. The Helm appears to have used that strategy since loading some crude in Iran in May.
Argentine President Mauricio Macri unveiled a series of stimulus measures last week in response to a shockingly bad performance in the nation’s primary. The package also came in the wake of market gyrations that saw the peso lose roughly 25 percent. President Macri froze fuel prices for three months, a move that is a huge setback for the oil industry. It may slash spending by $100-$120 million per month as long as the price controls remain in effect.
Freepoint Commodities Singapore says it will start supplying very low-sulphur fuel oil (VLSFO) in the fourth quarter in the world’s largest bunkering port when ships start testing a fuel that will meet global standards going into effect from 2020. The International Maritime Organization (IMO) has mandated that ships globally have to reduce the sulphur content in the fuels they use to 0.5% from 3.5% from 2020 to cut pollution. That means shippers will have to choose between installing air pollution control devices called scrubbers so they can keep burning high-sulphur fuel oil (HSFO), or opting to use more expensive VLSFO, marine gasoil or alternative fuel (i.e. LNG) to power their vessels. At the moment Buyers want to make sure they have good and consistent quality. Many of them have asked for a minimum viscosity guarantee (that many suppliers are not willing or able to guarantee). Shipowners want oils that have a viscosity of at least 100-centistoke. A higher viscosity points to a higher calorific value and is more suitable to existing ship engines, with most now burning HSFO with viscosity between 380-cst and 700-cst.
We expect bunker prices may change irregular today in a range of plus-minus 2-5 USD.