MABUX: Bunker Market this morning, Sept 20
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) continued downward changes on Sep. 19
380 HSFO - USD/MT 453.82 (-9.92)
180 HSFO - USD/MT 488.58 (-10.48)
MGO - USD/MT 680.46 (-5.54)
Meantime, world oil indexes demonstrated upward changes on Sept.19 as Saudi Arabia tapped Iraq and others to ensure there’s no default in its fuel delivery to customers. That came just days after the kingdom declared little fallout from an attack on its energy infrastructure.
Brent for November settlement increased by $0.80 to $64.40 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery rose by $0.02 to $58.19 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 6.27 to WTI. Gasoil for October delivery increased by 4.75.
Today indexes continue to rise after a Saudi-led coalition launched a military operation north of Yemen's port city of Hodeidah, as the United States worked with Middle East and European nations to build a coalition to deter Iranian threats after the Saudi attack.
Saudi Arabia would not be stretched in meeting customer obligations, particularly after it said half of the production lost from the weekend attacks had been restored and the balance would be back by November.
Saudi Arabia's ability to avert a global oil supply crunch will only become clear in a few weeks, because for now its crude held in storage can fill the gap and mask the scale of damage to its facilities, traders and analysts say. At the same time the Saudi state-owned Aramco Trading Co purchased diesel cargoes and also sought one-off supplies of aviation fuel this week. Moreover, Saudi Arabia asked Iraq for 20 million barrels of crude to supply domestic refineries, adding to doubts over whether the Kingdom will be able to return to full output this month following weekend attacks on key oil facilities.
Earlier this week Saudi said production will be back to normal levels in two to three weeks, which means restoring output to about 10 million barrels per day. But many are skeptical, while the lack of transparency about Saudi inventories adds to uncertainty about whether Riyadh can keep markets supplied without disruption.
The attacks knocked out over half of active Saudi crude production and severely limited the country's spare capacity, a cushion for oil markets in any unplanned outage. U.S. Secretary of State Mike Pompeo and officials in Riyadh said evidence showed the weapons used were fired from southwest Iran instead and blamed Iran in the attack.
Iranian Foreign Minister Javad Zarif said Pompeo’s remarks may be aimed at deceiving President Donald Trump into going to war against Tehran. Trump has already said he had no wish to engage in a military battle with Iran. President’s remarks were interpreted as meaning that the United States would support Saudi Arabia with intelligence, targeting information and surveillance capabilities to strike back at Iran, though the U.S. itself would not fire any weapon. Trump has said there were many options short of war with Iran and has ordered the U.S. Treasury to "substantially increase sanctions" on Tehran. Zarif said that the Iranian response to a U.S. or Saudi military strike on the Islamic Republic would be "all-out war".
Meanwhile, weekly report from the Energy Information Administration on U.S. oil inventories showed, that crude stockpiles rose by 1.1 million barrels last week against expectations for a drop of 2.5 million barrels. However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.
In the United States torrential rain from Tropical Storm Imelda has forced a major refinery to cut production and shut a key oil pipeline, terminals and a ship channel in Texas.
Global markets are also keeping an eye on U.S.-China trade negotiations in Washington, as officials from both sides resumed face-to-face talks for the first time in nearly two months on Sept.19-20. The negotiations are aimed at laying the groundwork for high-level talks in early October that will determine whether the two countries are working toward a solution or headed for new and higher tariffs on each other's goods.
We expect bunker prices to demonstrate upward changes today: about 3-5 USD up for IFO, about 4-6 USD up for MGO.