MABUX: Bunker market this morning, Nov 15

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 irregular changes on Nov 14:

380 HSFO - USD/MT – 337.89 (-4.26)
180 HSFO - USD/MT – 381.42 (-4.97)
MGO - USD/MT – 663.21 (+1.88)

Meantime, world oil indexes also demonstrated multidirectional changes after the Energy Information Administration reported a crude oil inventory increase for the last week.

Brent for January settlement decreased by $0.09 to $62.28 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by $0.35 to $56.77 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.51 to WTI. Gasoil for December delivery increased by $5.50.

Today morning oil indexes rise as OPEC's outlook for oil demand next year added hopes that the producer group and its associates will keep a lid on supply when they meet to discuss policy on output next month.

The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expected demand for its oil to fall in 2020.OPEC on Nov.14 pointed to a smaller surplus in the oil market next year. In a monthly report, OPEC said demand for its crude will average 29.58 million bpd next year, 1.12 million bpd less than in 2019. The drop in demand could press the case for the Organization of the Petroleum Exporting Countries and its allies to maintain supply curbs at a meeting on Dec. 5-6. Still, the report kept its 2020 economic and oil demand growth forecasts steady.

According to the Energy Information Administration U.S. oil inventories rose by 2.2 million barrels for the week ended Nov. 8, compared with expectations for a build of 1.65 million barrels. Gasoline inventories rose by nearly 1.9 million barrels, versus expectations for a drop of 1.17 million barrels. Distillate stockpiles fell by about 2.5 million barrels, compared with forecasts for a decline of 950,000 barrels. Crude production rose by 200,000 barrels per day (bpd) to a weekly record of 12.8 million bpd, the data showed. The inventory numbers were released a day later due to Monday’s federal holiday for Veterans Day.

Moreover, U.S. crude oil output will grow more than expected in 2019 and 2020, the U.S. Energy Information Administration forecasted this week. U.S. oil production is expected to rise to 12.29 million barrels per day this year, 30,000 bpd more than the EIA forecast last month. U.S. oil output is expected to rise an additional million bpd to 13.29 million bpd in 2020.

The agency increased its forecast for U.S. demand for petroleum and other liquid fuels this year to 20.58 million bpd, reflecting an annual demand increase of 80,000 bpd compared with last month’s forecast for 40,000 bpd. Petroleum and liquid fuels demand is expected to rise 170,000 bpd to 20.75 million bpd in 2020, the agency said.

On a positive note, signs of improving trade relations between the U.S. and China, a potential agreement on Brexit after the UK's general election, and a stabilization of the downward slope in major emerging economies could stabilize growth at the current forecast level.
OPEC’s Secretary General Mohammad Barkindo, commented, that the outlook in 2020 could surprise to the upside, citing prospects for a resolution of the trade dispute and lower non-OPEC supply.

Optimism that the United States and China could soon sign an agreement to end their trade war also seeped into the market after White House economic adviser Larry Kudlow said a deal was "getting close", citing what he called very constructive discussions with Beijing.

We expect bunker prices may demonstrate irregular changes today: US$ 1-3 down for IFO, US$ 3-5 up for MGO.