MABUX: Bunker Market this morning Oct. 04

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 evolution on Oct. 3

380 HSFO - USD/MT 394.76 (-4.97)
180 HSFO - USD/MT 433.26 (-5.60)
MGO - USD/MT 659.17 (-2.89)

Meantime, world oil indexes also demonstrated slight rregular changes on Oct.3.

Brent for December settlement increased by $0.02 to $57.71 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery fell by $0.19 to $52.45 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 5.25 to WTI. Gasoil for October delivery decreased by 4.25.

Today indexes rise but still under the pressure of  fears that slower global economic growth will hurt fuel demand, while Saudi Arabia said it has fully restored oil output after recent attacks.

Weak U.S. services sector and jobs growth data on Oct.3 added  worries about global oil demand and exacerbated fears that a protracted U.S.-China trade war could push the global economy into a recession. However, recent data showing a slowdown in U.S. shale output and drilling activity could lend some support.

The Institute of Supply Management said its non-manufacturing index fell to its lowest level since August 2016. That came on the heels of the ISM’s purchasing managers index for manufacturing, which posted the lowest reading since 2009. Then, on Wednesday, the ADP National Employment Report showed that private payrolls growth in August was not as strong as previously estimated.

The impact of the Saudi attacks on physical supply has now unwound more or less completely. Saudi Oil Minister Prince Abdulaziz bin Salman told a conference in Moscow on Oct.03, that the kingdom’s output had stabilized at 9.9 million barrels a day, and that it now has another 1.4 million barrels a day of spare capacity.

Despite increasing signs of a slowdown in global demand growth, Russian Energy Minister Alexander Novak said there was no need for any immediate change to the OPEC+ agreement on output restraint that is currently keeping 1.2 million barrels a day of crude oil off world markets. He also noticed, that he still expects global demand to grow by 1.4 million barrels a day, while the International Energy Agency expects 1.3 million b/d but warns that demand is “fragile”. The OPEC+ group is due to review its agreement in the first week of December, while the agreement itself is due to run through the end of March 2020.

Russian oil output edged down to 11.25 million barrels per day (bpd) last month from August’s 11.29 million bpd but remained above the caps set under a global production deal. Under the accord reached between OPEC member states and other oil producers, Russia has agreed to reduce output by 228,000 bpd from an October 2018 baseline. The country’s oil output reduction totalled 200,000 bpd last month.

Russian production has been relatively high amid attacks on Saudi Arabia’s oil infrastructure, which crippled the kingdom’s output. Following the attacks, OPEC oil output fell to an eight-year low in September.

We expect bunker prices to demonstrate slight irregular changes today: plus/minus 1-3 USD for IFO, 3-5 USD down for MGO.