MABUX: Bunker Market this morning, Oct 28

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) slightly increased on Oct.25

380 HSFO - USD/MT 361.33 (+2.43)
180 HSFO - USD/MT 401.79 (+1.90)
MGO - USD/MT 669.35 (+2.70)

Meantime, world oil indexes demonstrated irregular changes on Oct.25 as gloomy economic growth forecasts renewed concerns over the outlook for demand

Brent for December settlement increased by $0.35 to $62.02 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery rose by 0.43 to $56.66 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.36 to WTI. Gasoil for November delivery declined by $1.25.

Today indexes decline as data released in China reinforced signs that its economy is slowing, though progress in China-U.S. trade talks has supported prices.

Profits at Chinese industrial companies fell for the second straight month in September as producer prices continued their slide, highlighting the toll a slowing economy and protracted U.S. trade war are having on corporate financial results. At the same time, there are signs of progress in China-U.S. trade talks.

The Office of the U.S. Trade Representative (USTR) said on Oct.25 that Beijing and Washington are close to signing a partial trade deal. U.S. President Donald Trump said on the same day that negotiations between the two sides “are doing very well.” The two sides issued a statement on Oct.25 saying they are close to finalizing some parts of a trade agreement.

U.S. energy companies also reduced the number of oil rigs operating this week, leading to a record 11-month decline as producers follow through on plans to cut spending on new drilling. The US oil and gas rig count fell sharply this week, according to Baker Hughes, with a drop of 25 rigs for the week. This week marks nine decreases out of the last ten weeks. The total oil and gas rig count now stands at 830, or 238 down from this time last year. The total number of active oil rigs in the United States decreased by 17 according to the report, reaching 696. That marks the first time since April 2017 that the oil rig count has fallen below 700. The number of active gas rigs decreased by 4 to reach 133. At the same time, production has grown from 11.7 million bpd at the beginning of the year to 12.6 million bpd for week ending October 18—a growth of almost 1 million bpd in less than a year.

Russia's energy ministry said on Oct.25 it is continuing close cooperation with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers to enhance market stability and predictability. The statement came a day after Igor Sechin, CEO of Russian oil producer, Rosneft, said the September attacks on Saudi oil assets created doubts over its reliability as a supplier. The attacks temporarily shut down around half of the kingdom's oil output. OPEC+, an alliance of OPEC members and other major producers including Russia, has since January implemented a deal to cut output by 1.2 million bpd to support the market. The pact runs to March 2020 and the producers meet to review policy on Dec. 5-6.

Adding further support to prices, officials at OPEC said extended supply curbs are an option to offset the weaker demand outlook in 2020. Saudi Arabia, OPEC’s de facto leader, wants to focus first on boosting adherence to the group’s production-reduction pact with Russia and other non-members, an alliance known as OPEC+, before committing to more cuts.

Elsewhere, a suggestion by U.S. President Donald Trump that Exxon Mobil or another U.S. oil company could operate Syrian oil fields drew rebukes from legal and energy experts.

A surprise decline in U.S. inventories of crude also supported oil indexes. The U.S Energy Information Administration surprised the market on Oct.23 by announcing a 1.7-million-barrel drop in domestic crude stockpiles, versus analysts’ expectations for a 2.2-million-barrel build.

Bunker prices are expected to demonstrate slight irregular changes today: 1-3 USD up for IFO, 1-3 USD down for MGO.