MABUX: Bunker Market this morning, Sep. 27
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 Sep.26:
380 HSFO - USD/MT - 438.94(+3.23)
180 HSFO - USD/MT - 478.30(+2.94)
MGO - USD/MT – 671.90(-2.65)
Meantime, world oil indexes also changed sideways on Sep.26 amid optimism that the United States and China could resolve their trade dispute, though prices came under pressure from Saudi Arabia’s moves to restore output quickly after attacks on its oil installations.
Brent for November settlement increased by $0.35 to $62.74 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery fell by $0.08 to $56.41 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $6.33 to WTI. Gasoil for October lost $3.25.
Today morning oil indexes do not have any firm trend so far.
Amid reports that Saudi Arabia has moved to speed up the listing of its oil giant Aramco and amid conflicting reports about the impact of the attacks on Saudi oil on what would be the world’s largest IPO ever, the latest report coming out of the Kingdom is that Aramco is set to announce as soon as next month its intention to proceed with the initial public offering. Before the attacks, reports had it that Aramco could list shares on its domestic stock exchange as early as in November 2019. Meantime, at the beginning of this month, the top managers of the Saudi state oil firm reiterated that it’s up to the sole shareholder of the company—the Kingdom of Saudi Arabia—to decide when the listing will take place.
Oil and gas activity in the United States is slowing even in some of the most prolific regions, as oil producers undergo some spending-belt tightening to stay a step ahead of volatile oil prices. While oil production is still increasing, holding firm at 12.4 million bpd for the last few weeks, oilfield services sector reported that they have seen declines in activities, a confirmation of the belief that US oil producers continue to find new ways to increase the operation profitability. In 2019, the number of active oil rigs in the United States have fallen sharply, by 158, incurring losses in 10 of the last 11 weeks. At the same time, oil production in the United States has increased from an average of 11.7 million bpd at the beginning of the year to an average of 12.4 million bpd now.
Despite Trump’s criticism against Beijing, both the U.S. and China are under pressure to make a deal. Both sides have also made some positive gestures in recent weeks, delaying tariffs on select items. China is preparing to purchase more pork from the U.S., a move that will both meet domestic shortages but also be in favour of Washington. It looks that the American and Chinese leadership would not be making such moves if they weren’t convinced that at least a minor breakthrough in the trade talks was possible.
Two days after Iran said that the detained UK-flagged oil tanker was “free to leave Iran,” officials in the Islamic Republic said on Sep.25 that the detention order had been lifted, but the tanker is still being detained because of the ongoing investigation. According to Iran, procedures to release Stena Impero were “in final stages.” Several high-profile incidents in recent months have increased the tension between Iran and the West in the Middle East and in the most important oil shipping corridor in the world, the Strait of Hormuz, which is in close proximity to Iranian coasts.
Tanker freight rates soared to their highest levels of the year this week as Asian importers scrambled to secure crude supplies from the U.S. after attacks on Saudi Arabia’s oil facilities took a big amount out of global output. Daily spot rates for supertankers were quoted at above $43,000 this week from less than $30,000 before the Sept. 14 attacks in Saudi Arabia. Average time charters, which are for longer periods, were quoted at $38,600 a day compared with an earlier rate of $28,300, according to the Baltic Exchange. The rates were the highest since the bourse introduced its pricing index in March for so-called dirty tankers, which carry crude and heavy fuels oils.
The first deal for a cargo of Marine Fuel 0.5% was reported in the Platts Market on Close assessment process in Singapore on Sep.26. Shell sold a 20,000 mt cargo of Marine Fuel 0.5% on a FOB Straits basis to P66 at a premium of $19/mt to October average of the Mean of Platts Singapore Marine Fuel 0.5% assessments. The MOC process on Sep.26 saw bids from P66 and Sinopec Hong Kong as well as offers from Vitol and Trafigura. Platts launched daily cargo and barge assessments for Marine Fuel 0.5% reflecting residual marine fuels with a maximum sulfur limit of 0.5% at key ports across the globe starting January 2, 2019.
We expect bunker prices may change irregular today in a range of plus-minus 1-3 USD.