MABUX: Bunker market this morning, Nov 27

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) increased on November 26:

380 HSFO: USD/MT – 341.95 (+2.07)
180 HSFO: USD/MT – 386.18 (+1.64)
MGO: USD/MT – 667.93 (+2.86)

Meantime, world oil indexes also demonstrated upward changes on Nov.26 on hopes that United States and China will soon reach an agreement to at least partially resolve their trade war.

Brent for January settlement increased by $0.62 to $64.27 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery rose by $0.40 1 to $58.41 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.86 to WTI. Gasoil for December delivery increased by $6.75.

Top trade negotiators from China and the U.S. held a phone call on Nov.26, China's Commerce Ministry said, as the two sides try to hammer out a preliminary "phase one" deal in a trade war that has dragged on for 16 months. The Chinese state-backed Global Times newspaper on its Twitter feed on Monday the two countries are very close to a "phase one" trade deal but noted that Washington and Beijing had not agreed on specifics or the size of rollbacks of tariffs on Chinese goods. Beijing's insistence that Washington roll back the Trump administration's tariffs has been a major sticking point. The trade dispute between Washington and Beijing has clouded the outlook for future oil demand and even as a deal is yet to be finalized, any positive headline tends to support the market.

Today morning oil indexes slide down after an unexpected build in U.S. crude inventories, but optimism around the signing of the first phase of a U.S.-China trade deal supports the prices.

According to data from the American Petroleum Institute (API), U.S. crude stocks rose by 3.6 million barrels last week to 449.6 million, compared with expectations for a decrease of 418,000 barrels. Official inventory data from the U.S. Energy Information Administration (EIA) is due later on Wednesday.

Looking ahead, next week’s OPEC meeting will be in focus as it is widely expected to extend production cut agreement to June or even the end of next year. The Organization of the Petroleum Exporting Countries (OPEC) and its allies in a production cutting pact, a group known as OPEC+, will begin holding meetings on Dec. 4 in Vienna to examine its output policy. OPEC plans to meet on Dec. 5 and then a meeting of the OPEC+ group on Dec. 6 will make a final announcement on the future policy.

The head of the International Energy Agency told that OPEC countries should make the right decision for a “very fragile” global economy, predicting strong oil production growth from the non-OPEC countries, especially the United States, Brazil, Norway and Guyana. Some believe OPEC and Russia could cut output even more. Saudi Arabia may be motivated to push oil prices higher in light of the upcoming Aramco offering. At the same time, Russia has not been happy with the structure of the deal and may want to find a way to limit participation.

We expect bunker prices may demonstrate upward changes today: 2-4 USD up for IFO, 5-7 USD up for MGO.