MABUX: Bunker market this morning, Nov 18

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 decreased on Nov 15:

380 HSFO - USD/MT – 334.29 (-3.60)
180 HSFO - USD/MT – 379.52 (-1.90)
MGO - USD/MT – 663.07 (-0.14)

Meantime, world oil indexes rose on Nov.15 as comments from a top U.S. official raised optimism for a U.S.-China trade deal, but worries about increasing crude supplies capped prices.

Brent for January settlement increased by $1.02 to $63.30 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery rose by $0.95 to $57.72 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.58 to WTI. Gasoil for December delivery gained $6.50.

Today morning oil indexes do not have any firm trend so far.

Optimism that the United States and China may soon sign an agreement to end their trade war helped support prices. U.S. Commerce Secretary Wilbur Ross said in an interview on Fox Business Network that there was a very high probability the United States would reach a final agreement on a phase one trade deal with China.

As per the International Energy Agency, the Organization of the Petroleum Exporting Countries and its allies face stiffening competition in 2020. The IEA forecast, demand for crude oil from OPEC in 2020 will be 28.9 million bpd, 1 million bpd below the exporter club's current production. It was the IEA's last monthly report before the Dec. 5-6 talks among OPEC states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market. The agency kept its assessments for growth in global oil demand in 2019 and 2020 at 1 million bpd and 1.2 million bpd respectively, but said its outlook might slightly underestimate the impact of tariffs from the U.S.-China trade war.

As per RF Energy Ministry, Russia will not only keep its position on the global energy markets, but it expects to be able to boost its crude oil exports by up to 500,000 bpd, the equivalent of 25 million tons. Russia’s total crude oil exports in five years could grow to 280 million tons, or 5.62 million barrels per day. Russia exports a large part of its crude oil production, mainly to Europe, although China has emerged as a big buyer of Russian crude in recent years as Beijing’s oil demand continues to grow. China is the biggest buyer of Russian oil outside Europe, while Russia became the largest supplier of crude to China in 2016, surpassing Saudi Arabia for the first time on an annual basis. For two years after 2016, Russia was the single biggest supplier of crude oil to China, but Saudi Arabia has recently regained its number-one supplier status to China. Russia’s plans to boost oil exports puts it, again, in direct competition in the most coveted oil demand market with Saudi Arabia.

In the United States, production keeps rising, and there was a bigger-than-expected increase in U.S. stockpiles. Production has grown from 11.7 million bpd at the beginning of the year to an all-time high of 12.8 million bpd for week ending November 8, marking the first production increase after five weeks of holding fast at 12.6 million bpd. The production growth represents an increase of more than 1 million bpd from the beginning of the year.

U.S. crude inventories grew by 2.2 million barrels (as per EIA report last week), exceeding the 1.649 million-barrel rise forecast. The U.S. shale industry plans another spending freeze next year and a sharp slowdown in production growth, as prolific oil and natural gas output has pressured prices and squeezed profits.

The US oil and gas rig count continued its downward slide last week. For oil rigs specifically, last week marked eleven decreases out of the last thirteen weeks, falling 96 rigs in that timeframe. The total oil and gas rig count now stands at 806, or 276 down from this time last year. The total number of active oil rigs in the United States decreased by 10 reaching 674.

Venezuela had loaded almost 11 million barrels of crude in just the first 11 days of November, which is more than twice as much as it did in the same period last month. Most of the oil seems to have gone to India and China, with half of the vessels transporting it turning their transponders off to avoid detection. Venezuela’s crude oil production in September averaged just 644,000 bpd, down from 727,000 bpd in August and an average 975,000 bpd over the first half of the year. This shows that sanctions are working to curb oil production, but they have not been able to stifle Venezuela’s exports to zero. The country has oil-for-cash agreements with China and Russia, and although it struggles to repay this debt with its limited amount of oil, it is paying down some of it—apparently without violating any sanctions.

We expect bunker prices may rise today in a range of plus 4-7 USD.