MABUX: Bunker Market this morning, Oct 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) decreased on Oct. 29.

380 HSFO - USD/MT 360.93 (-2.61)
180 HSFO - USD/MT 402.74 (-2.53)
MGO - USD/MT 6689.75 (-2.04)

Meantime, world oil indexes demonstrated slight irregular changes on Oct.30

Brent for December settlement increased by $0.02 to $61.59 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by 0.27 to $55.54 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $6.05 to WTI. Gasoil for November delivery declined by $0.50.

Today indexes decline after the American Petroleum Institute (API) reported that U.S. oil inventories rose last week.

The API said that crude inventories rose by about 600,000 last week. The market now expects that the Energy Information Administration’s government data to show a rise of 494,000 in crude inventories. Crude stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.2 million barrels.

Oil indexes were also dampened by lower demand growth for 2019 and 2020 anticipated by the International Energy Agency (IEA). While noting that demand rose by 800,000 barrels a day in July and 1.4 million barrels a day in August, the IEA has lowered its forecast for demand growth in 2019 by 100,000 barrels per day to around 1 million bpd and reduced its forecast for 2020 by the same amount to 1.2 million bpd.

Demand concerns remain strong amid the 16-month old trade war between the United States and China, which has hit economic growth around the world, sapping demand for oil. The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for U.S. and Chinese leaders to sign it next month, a U.S. administration official said.

Russia's deputy energy minister also said on Oct.29 it was too early to talk of deeper output cuts by OPEC and its allies, adding to the pressure on the market. Chinese oil trader Unipec has restarted using tankers owned by state-owned shipping group COSCO after the United States eased sanctions temporarily on the Chinese state-owned shipping group. In one of the biggest sanctions actions taken by the U.S. government since its crackdown on Iranian oil exports, Washington imposed sanctions on Chinese tanker companies in late September for alleged involvement in moving crude oil from Iran. Concern over shippers falling foul of the U.S. sanctions sent oil freight costs to record highs around the world, adding millions of dollars to the cost of every voyage. Last week, Washington gave temporary approval for companies to wind down transactions with the designated COSCO subsidiaries. It was unclear if this only applied to tankers that were not operated by the blacklisted COSCO entities. Shipping sources said last week that at least three other COSCO tankers which were unable discharge their oil due to U.S. sanctions, and chartered by other companies, were on their way to Asia.

U.S. sanctions on a top Chinese shipping fleet can cause to the less burning of the dirtiest marine fuels at sea at the start of next year. The move to blacklist ships from COSCO on Sept. 24 for allegedly ferrying sanctioned Iranian oil will undercut demand for ships' traditional means of power because a vessel crunch meant fewer docked and attached kit to filter the dirtier fuels. From January 2020, the United Nations International Maritime Organization (IMO) will ban ships from using fuel with a sulphur content above 0.5%, compared with 3.5% now. This high sulphur fuel oil (HSFO) will not be banned outright but allowed if vessels attach at port a cleaning device called a scrubber -- something fewer shipowners and brokers did given the highest profits for freight seen in years. It is estimated that just 2,500 ships will be fitted with scrubbers by Jan. 1 compared with 4,000 initially projected by the IMO.
However, it projected a rebound in demand as the year goes on and more ships carry out their re-tooling.

We expect bunker prices may demonstrate slight irregular changes today: within plus/minus 1-3 USD.