MABUX: Bunker market this morning, Nov 08

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) changed insignificant and irregular on Nov.07:

380 HSFO - USD/MT - 355.24 (-7.97)
180 HSFO - USD/MT – 395.83 (-7.02)
MGO - USD/MT – 667.85 (-3.44)

Meantime, world oil indexes demonstrated irregular changes on Nov.07 after China hinted at progress toward a trade deal with the United States, raising hopes for an end to a long dispute that has weighed on economic growth and demand for fuel.

Brent for January settlement increased by $0.55 to $62.29 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery rose by $0.80 to $57.15 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.14 to WTI. Gasoil for November delivery lost $3.50.

Today morning oil indexes have turned into slight downward evolution.

China said on Nov.07 that it had agreed with the United States for both sides to remove tariffs in phases, without specifying a timetable. A deal may be signed this month by U.S. President Donald Trump and Chinese President Xi Jinping at a yet-to-be determined location. The trade dispute has prompted the market to lower forecasts for oil demand and raised concerns that a supply glut could develop in 2020.

Iran has stepped up activity at its underground Fordow nuclear plant: a move France said showed for the first time that Tehran explicitly planned to quit a deal with world powers that curbed its disputed nuclear work. In another development that could also aggravate tensions between Iran and the West, Iran briefly held an inspector for the U.N. nuclear watchdog and seized her travel documents. Iran said the inspector was prevented from entering the Natanz facility because of a concern she might be carrying "suspicious material". Besides, Iran's decision to inject uranium gas into centrifuges at Fordow, a move that further distances Iran from the accord, was described by Moscow as extremely alarming.

Iraqi security forces shot dead at least four protesters in central Baghdad on Nov.07. Mass demonstrations continued for a 13th straight day with thousands thronging central areas of the capital. The country is beginning to feel the fiscal pinch of weeks of the unrest, which started in Baghdad and quickly spread to southern cities. It was reported that oil production and exports have not been significantly affected by the unrest. But the halting of fuel tankers that transport fuel from the Nassiriya refinery to regional gas stations caused fuel shortages across the southern Iraqi province of Dhi Qar. The refinery had recently been producing around half its capacity. The further escalation may set up momentum upward driver for fuel indexes.

Venezuela’s state-held oil firm PDVSA has cut its outstanding debt to the largest Russian oil producer, Rosneft, to below US$1 billion. Rosneft has extended 6 billion USD of loans to PDVSA, which needs to be fully redeemed through crude oil supplies by the end of this year. Debt as at September 30, 2019, had dropped to 800 million USD, down from US$1.1 billion as at the end of the second quarter this year. As per U.S., Russia’s Rosneft is “really central to the regime’s survival,” because it buys the oil Venezuela produces and helps it to sell the oil and arrange the financing. The U.S. Administration is thinking about slapping sanctions on Rosneft, but it hasn’t done it yet, as it is looking at a broader context in its relations with Russia.

Brazil may be able to produce in the future as much as 7 million barrels of oil per day (bpd). The South American oil producer, which currently pumps 3 million bpd of crude oil, could further consolidate its global position as an exporter of commodities. Production in Brazil is rapidly growing thanks to start-ups of new offshore oil fields. Total liquids production increased by 480,000 bpd year on year to 3.10 million bpd in August—a record high. The OPEC estimates that Brazil will be the second-largest contributor to non-OPEC supply growth this year and next, after the United States. Brazil, like the United States, is not part of the OPEC+ coalition that currently restricts production hoping to draw down global oversupply.

We expect bunker prices may demonstrate irregular changes today in a range of plus-minus 3-5 USD.