MABUX: Bunker market this morning, Nov 26

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 November 25.

380 HSFO: USD/MT – 339.88 (-3.62)
180 HSFO: USD/MT – 384.54 (-3.86)
MGO: USD/MT – 665.07(-0.39)

Meantime, world oil indexes rose on Nov.25 as positive comments from the United States and China rekindled hopes in global markets that the world’s two largest economies could soon sign an interim deal to end their trade war.

Brent for January settlement increased by $0.26 to $63.65 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery rose by $0.24 to $58.01 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.64 to WTI. Gasoil for December delivery gained $1.00.

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

Chinese daily Global Times on Nov. 25 cited experts close to the Chinese government as saying that China and the United States have reached a broad consensus on the first phase of the trade deal, though some differences remain over the removal of tariffs. U.S. President Donald Trump and Chinese counterpart Xi Jinping last week expressed a desire to sign an initial trade deal and defuse a 16-month tariff war that has lowered global growth. However, concern remains that events in Hong Kong, riven by months of anti-government unrest, could undermine progress in trade talk.

Renewed conflict in the Strait of Hormuz pushed the United States to establish an international coalition for maritime security to ensure safe passage of shipping traffic and guarding against further disruption in oil supplies. While such security coalitions have been successful in the past, applying the same approach in the Middle East may not improve conditions and may even exacerbate tensions. The Strait of Hormuz is the primary shipping route for one-sixth of global oil production and one-third of the world’s liquefied natural gas.  Despite the recent incidents and rhetoric from Iran about shutting down the Strait of Hormuz to global oil shipping, there has not been a corresponding increase in oil prices, other than a short-term blip.

An infamous Iranian hacker group may be targeting industrial control systems to cause major disruptions in power grids, oil refineries, and other physical energy assets, in an apparent sharpened focus on cyber warfare on critical industries. These attempts by Iranian hackers to infiltrate systems controlling energy assets come at a time of heightened tension between the United States and Iran and at a time of increased cyber threats to the energy industry in the United States and globally. It’s unclear if the hackers have cracked any of the systems they attempted to hack. Their motivation is also unclear, but Microsoft thinks that the ultimate goal is to try to gain access to a system in order to carry out a physically devastating attack on critical infrastructure, such as energy infrastructure.

The OECD said that global GDP growth will slow to 2.9 percent this year, and stay at about that rate through 2021. It’s the weakest expansion since the financial crisis a decade ago. Last year, GDP grew by 3.5 percent. Worse, the OECD said these weren’t temporary problems. As per OECD, without coordination for trade and global taxation, clear policy directions for the energy transition, uncertainty will continue to loom large and damage growth prospects.

Refineries across the United States have reduced their total crude oil processing so far in 2019, as demand for oil products both in America and abroad has weakened. The cutting of rates has helped refiners avoid a fuel glut domestically, but lower processing rates have built an oversupply in crude. Some of the decline in crude oil input into refineries could be attributed to the shutdown of the Philadelphia Energy Solutions refinery complex with a total refining capacity of 335,000 bpd, which was the largest such complex on the Eastern seaboard, before several explosions and a huge fire damaged the complex in June this year.

Russia’s gas Company Gazprom sold on Nov.22 3.6 percent of its voting shares, raising almost US$3 billion in the sale. The company, however, did not disclose who the buyers of the stake were, and it actually wasn’t obliged to, because the stake sale was of less than 5 percent. It is expected, that the sale of shares would be a positive thing for Gazprom in the medium term as its free float grows and as its share in the stock exchange indexes could also grow. Just over 50 percent in Gazprom is controlled by the Russian government. The Russian company has often been accused of fulfilling Moscow’s political goals on the European gas market.

We expect bunker prices may demonstrate slight upward trend today in a range of plus 1-4 USD.