MABUX: Bunker market this morning, Oct 29

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) demonstrated slight upward trend on Oct.28:

380 HSFO - USD/MT – 363.54 (+2.21)
180 HSFO - USD/MT – 405.27 (+3.48)
MGO - USD/MT – 670.31 (+0.96)

Meantime, world oil indexes fell on Oct.28 as expectations U.S. crude stockpiles will rise and worries about weak Chinese industrial data offset hopes oil demand will increase if talks progress on a Sino-American trade deal.

Brent for December settlement decreased by $0.45 to $61.57 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by $0.85 to $55.81 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.76 to WTI. Gasoil for November delivery lost $6.00.

Today morning oil indexes have started in the phase of slight downward evolution again.

After building for three weeks in a row, U.S. crude oil stockpiles at the Cushing, Oklahoma, delivery point for WTI, have risen by about 1.5 million barrels in the week through Oct. 25, (as per data from market intelligence firm Genscape). Total U.S. crude inventories were forecast to have increased by around 700,000 barrels last week.

Russia said that OPEC and its oil-exporting allies would factor in the slowdown of U.S. oil output growth when they meet to discuss their output agreement in December. It was also noted that it is too premature to talk about deeper production cuts. A shale boom, led by output increases in Texas and North Dakota, helped make the United States the biggest oil producer in the world, above Saudi Arabia and Russia. However, the rate of growth has slowed this year as U.S. energy firms have reduced the number of oil rigs as producers follow through on plans to cut spending on new drilling this year.

Top U.S. and Chinese trade negotiators have discussed a plan in which China would buy more farm products in exchange for the U.S. removing some tariffs. The outlines of the partial deal are striking since they would essentially attempt to take the trading relationship back to where it was before the trade war. Even still, there is a long way to go – for now, President Trump has only agreed to cancel the October 15 tariff increase on $250 billion worth of goods. China is offering more purchases, but also wants the planned December tariffs scrapped.

Meantime, data released in China reinforced signs that its economy is slowing. 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 balance sheets.

IMF predicted that Iran would need oil priced at $194.6 a barrel to balance its budget next year. Hurt by tighter U.S. sanctions, Iran is expected to have a fiscal deficit of 4.5% this year and 5.1% next year. Iran’s economy is expected to shrink by 9.5% this year, compared to a prior estimate of a 6% contraction, but real gross domestic product (GDP) growth is expected to be flat next year. The IMF forecast Iran’s exports of goods and services to drop to $60.3 billion this year from $103.2 billion last year, and to fall further to $55.5 billion in 2020.

India, one of the drivers of oil demand growth in Asia and the world, has just seen its oil imports drop to three-year lows and fuel processing rates plunge to a 15-year low, as slowing economic growth is taking its toll on demand. Refinery runs in September were at their lowest in 15 years, amid waning demand for fuels. Crude oil processing in India dropped by 6.9 percent on the year in September, which was the largest annual decline since June this year. Some refineries were shut for maintenance and others for fuel upgrades because India is getting ready to migrate in April next year to less polluting fuels in order to cut emissions. It is expected that India’s economic growth is set to slow down in the near future, and this could further impact India’s fuel demand.

We expect bunker prices may demonstrate slight downward evolution today in a range of minus 2-5 USD.