MABUX: Bunker Market this morning, Oct 24

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) increased on Oct.23

380 HSFO - USD/MT 354.81 (+6.41)
180 HSFO - USD/MT 396.55 (+6.01)
MGO - USD/MT 665.71 (+5.19)

Meantime, world oil indexes demonstrated irregular changes on Oct.23 amid expectations for deeper output cuts by OPEC and its allies and data showing a larger-than-forecast inventory build also weighed.

Brent for December settlement increased by $1.47 to $61.17 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery rose by 1.49 to $55.97 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.20 to WTI. Gasoil for November delivery declined by $2.25.

Today indexes decline despite a surprise dip in U.S. crude stockpiles after comments by Russian Energy Minister Alexander Novak.

The U.S. Energy Information Administration reported a 1.7-million-barrel crude inventory drop last week, versus expectations for a build of 2.2 million barrels. The surprise draw was caused by a significant drop in crude imports. Despite being the world’s largest producer of light crude, the United States still buys significant volumes of heavy grade crude each week from Middle East and other producers. Gasoline inventories fell by 3.1 million barrels (compared to an expected drop of 2.27 million barrels). Distillate stockpiles dropped by about 2.72 million barrels (compared to expectations of a decline of about 2.8 million barrels). Refinery run rates picked up to about 85% of capacity from the previous week’s 83%. But that was still way below industry norm of around 90% at least. U.S. oil production remained at 12.6 million barrels per day.

The Russian Energy Minister Alexander Novak said no formal proposals have been put forward to change the terms of a global deal on curbing oil supplies that was agreed between OPEC and its allies. That announcement pressured oil indexes. The Organization for Petroleum Exporting Countries (OPEC) would consider deeper production cuts when it meets in December.

Also putting pressure on the market today was a report from the International Monetary Fund (IMF) that projected economic growth across Asia will slow more than previously expected. Growth in Asia could moderate to 5% in 2019, and 5.1% in 2020, the IMF said. That is 0.4% and 0.3% lower than its April projections.

Both China and the United States have achieved some progress in their trade talks, and any problem could be resolved as long as both sides respected each other. As the world wants China and the United States to end their trade war, it required openness rather than a "de-coupling" of countries or a new Cold War. Meantime, Beijing fears that the Trump administration wants a complete separation with China. The two countries have been working to resolve their trade dispute, with the United States announcing a "phase 1" deal with China on trade matters and suspending a scheduled tariff hike for October. The International Monetary Fund last week forecast that fallout from the U.S.-China trade war and trade disputes across the world would slow global growth in 2019 to 3.0%, the weakest in a decade.

We expect bunker prices to demonstrate irregular changes today: 6-8 USD up for IFO, 1-3 USD down for MGO.