MABUX: Bunker Market this morning, Sept 12

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) demonstrated irregular changes on Sep. 11

380 HSFO - USD/MT 392.65 (-1.31)
180 HSFO - USD/MT 433.89 (-1.55)
MGO - USD/MT 662.93 (+3.35)

Meantime, world oil indexes demonstrated downward evolution on growing speculation that U.S. sanctions against Iran may be dropped.

Brent for November settlement decreased by $1.57 to $60.81 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery fell by $1.65 to $55.75 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 5.06 to WTI. Gasoil for September delivery decreased by 11.25.

Today indexes rise amid moves to ease trade tensions between Washington and Beijing and a drop in U.S. crude inventories to the lowest in nearly a year.

China announced its first batch of tariff exemptions for 16 types of U.S. products. The exemptions will apply to U.S. goods including some anti-cancer drugs and lubricants, as well as the animal feed ingredients whey and fish meal. U.S. President Donald Trump said in a tweet that he will be postponing the imposition of 5% extra tariffs on Chinese goods by two weeks “as a gesture of good will”. He also said that China had made a good step ahead of a planned meeting aimed at defusing a trade war between the world's two largest economies. Deputy trade negotiators for both countries are expected to meet in Washington in mid-September, but no firm date has been released.

U.S. oil stockpiles fell more than expected last week. According to The Energy Information Administration (EIA) oil inventories fell by 6.9 million compared to forecast   drawdown of about 2.7 million. The EIA, meanwhile, reported U.S. crude exports at a blistering pace of 3.3 million bpd for last week. U.S. crude stocks have fallen nearly 22 million barrels in a span of just three weeks, with the draws coming unusually at the tail end of summer, when driving activity in the U.S. is typically on the decline. U.S. crude production remained at 12.4 million barrels last week, the same as the week before, the EIA said.

OPEC, which accounts for about 40% of world oil supply, can again be faced with a global glut like a few years ago. Indeed, the cartel’s monthly report highlighted the need for production cuts to prevent more oversupplies.

In a monthly report, OPEC said oil demand worldwide would expand by 1.08 million barrels per day in 2020, 60,000 bpd less than previously estimated, and indicated the market would be in surplus. That pushed oil indexes down. OPEC, in the report, also lowered its forecast for world economic growth in 2020 to 3.1% from 3.2% and said next year’s increase in oil demand would be outpaced by strong growth in supply from rival producers such as the United States.

Oil prices were driven lower by the sacking on Tuesday of U.S. National Security Advisor John Bolton by President Donald Trump. Bolton’s ouster could pave the way for negotiations between Washington and Tehran on a new nuclear deal for the Islamic Republic that may eventually see U.S. sanctions on Iranian oil being removed. Should there be no more embargoes on Iranian oil, an additional 1 million barrels from Tehran could end up in the market -- not exactly something that OPEC would welcome. Bolton had practically blocked all attempts of diplomacy between the Trump administration and Tehran while in office.

Bunker prices are expected to demonstrate downward changes today: about 5-7 USD down for IFO, about 8-11 USD down for MGO.