MABUX: Bunker market this morning, Nov 21
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 downward changes on Nov 21:
380 HSFO: USD/MT – 332.73 (-5.56)
180 HSFO: USD/MT – 377.13 (-5.61)
MGO: USD/MT – 656.27 (-4.24)
Meantime, world oil indexes increased on Nov.20 as U.S. stocks raised less, then expected.
Brent for January settlement increased by $1.49 to $62.40 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery rose by $1.90 to $57.05 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.29 to WTI. Gasoil for December delivery increased by $6.25.
Today morning oil indexes fell retreating after gaining more than 2% in the previous session.
The Energy Information Administration reported that U.S. crude stockpiles rose by 1.38 million barrels last week. The market was expecting a build of about 1.54 million barrels
The main drivers on the market are still uncertainty over the trade talks and what Russia’s and OPEC’s plan concerning the production cut deal.
U.S. President Donald Trump said on Nov.20 the United States is continuing to talk to China but gave no other details, as both sides tried to hammer out a phase one trade deal ahead of looming U.S. tariffs due next month. Trump last month announced an agreement for an initial trade deal with Beijing but no formal agreement has been released. The pact had initially been expected to be signed by mid-November, but now it is likely to be delayed to the next year as Beijing presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.
Some said Trump wants deeper concessions from China in order to roll back existing tariffs and cancel additional tariffs on some $156 billion in Chinese consumer goods scheduled to take effect Dec. 15. On Nov.19, Trump also threatened to raise tariffs if no deal is reached with Beijing.
At the same time, the Federal Reserve indicating in its October meeting released that it might be done with rate cuts for this year. That also supported oil indications.
Russian President Vladimir Putin’s declared that Moscow will support OPEC in whatever way necessary on production cuts when the cartel holds its meeting next month. Russia is part of the OPEC+ alliance, formed with the 14-member Organization of the Petroleum Exporting Countries, which has committed to keeping 1.2 million barrels per day of supply off the market for price support.
The views of the three big oil forecasting agencies on changes in inventory levels next year have diverged over the past month, as the outlook from two of them becomes slightly more positive for producers. The International Energy Agency (IEA), the U.S. Energy Information Administration (EIA) and the Organization of Petroleum Exporting Countries (OPEC) all still see global oil inventories building in the first half of 2020, if OPEC+ producers continue pumping as they have been, but the EIA and OPEC have both cut the size of the build. They have also become a little more positive for the second half of 2020. All three still see inventories growing over 2020 as a whole, but the build seen by OPEC is now negligible, at just 60,000 bpd, while that seen by the EIA has been trimmed to 300,000 bbl from last month’s 340,000 bbl.
Russian energy minister Alexander Novak said on Nov.20 he wants new volumes of gas condensate to be excluded from Russia’s quota as part of its oil output pact with OPEC. Novak’s remarks come as Russia’s output of condensate — a potentially high-value petroleum liquid — is expected to grow strongly in coming years as it expands its output of liquefied natural gas from new giant projects in the Arctic Circle. He thinks this should be discussed with OPEC+, since gas condensate is not being exported, we think it shouldn’t be included.
We expect bunker prices may demonstrate upward changes today: US$ 5-7 up for IFO, US$ 5-7 up for MGO.