MABUX: Bunker Market this morning, Sept 30

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 slight irregular changes on Sep. 27

380 HSFO - USD/MT 439.51 (+0.57)
180 HSFO - USD/MT 478.86 (+0.56)
MGO - USD/MT 671.06 (-0.84)

Meantime, world oil indexes also demonstrated irregular changes on Sept.27 on a faster-than-expected recovery in Saudi output, while there are still worries about global crude demand amid slowing Chinese economic growth.

Brent for November settlement decreased by $0.83 to $61.91 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery fell by $0.50 to $55.91 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 6.00 to WTI. Gasoil for October delivery increased by 9.00.

Today indexes are steady on positive trade news after China's factories unexpectedly ramped up production in September

A private survey of China’s manufacturing activity, the Caixin factory Purchasing Managers’ Index (PMI), was 51.4 for September — the highest reading since February 2018. The latest data was much higher than the 50.2 that was expected and the 50.4 recorded in August. PMI readings above 50 indicate expansion, while those below that level signal contraction. The improvement in the Caixin survey was driven largely by firmer domestic demand as foreign sales have continued to be dampened by the ongoing U.S.-China trade dispute.

However, earlier this week, the United States imposed sanctions on a number of Chinese tanker owning firms and executives for transporting Iranian oil in violation of the U.S. sanctions on the Islamic Republic. The fresh sanctions created chaos in the oil shipping sector as traders and shippers around the world scramble to avoid being involved in the latest U.S. sanctions regarding Iranian oil.  Key oil freight rates from the Middle East to Asia rocketed as much as 28% on Sept.27 in the global oil shipping market, spooked by U.S. sanctions on units of China’s COSCO for alleged involvement in ferrying crude out of Iran. The COSCO vessels account for about 7.5% of the world’s fleet of supertankers.

Geopolitical tensions in the Middle East are still in focus. Iranian President Hassan Rouhani said the United States offered to remove all sanctions on Iran in exchange for talks. However, U.S. President Donald Trump said he had refused the request by Tehran.

Tension is running high again between the U.S. and Iran, after the attacks on the Abqaiq facility and the Khurais oil field in Saudi Arabia on September 14, which the United States, and several European countries including the UK, blamed on Iran. Iran denies involvement in the attacks, while the U.S. continues with its maximum pressure campaign and continues to go after any person, entity, or tanker dealing with Iranian oil.

Emerging details related to the Trump impeachment inquiry also helped to dent demand sentiment.

Saudi Arabia had agreed a partial ceasefire in Yemen. Last week Saudi Arabia had restored capacity to 11.3 million barrels per day. Saudi Aramco has yet to confirm it is fully back online. While Saudi Arabia is maintaining exports by using crude from inventories and spare production capacity, how much of it is actually restored could only be determined in the next few weeks.

The International Energy Agency (IEA) said it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further. That pressured oil indexes.

In an indication of future production, U.S. energy firms reduced the number of oil rigs this week, and for a record 10th month in a row. The number of oil rigs declined by six last week to Sept. 27, bringing the total count down to 713, the lowest since May 2017.

Expect bunker prices to demonstrate irregular changes today: 3-5 USD down for IFO, 7-10 USD up for MGO.