MABUX: Bunker market this morning, Dec 10

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 rose on December 09:

380 HSFO: USD/MT – 351.90 (+6.86)
180 HSFO: USD/MT – 395.35 (+6.00)
MGO: USD/MT – 671.71 (+2.60)

Oil prices fell on Dec.9 after data showed Chinese exports declined for a fourth straight month, sending jitters through a market already concerned about damage to global demand by the trade war between Washington and Beijing. Beijing hopes an agreement with the United States can be reached as soon as possible, China’s Assistant Commerce Minister Ren Hongbin said on Monday. Monday’s declines also went against signs on Friday that China was easing its stance on resolving the trade dispute with the United States, confirming that it was waiving import tariffs for some soybean and pork shipments.

Oil prices continue to slip today for a second straight session as the cons of a slowing global demand outlook outweighed the pros of OPEC’s agreement with associated producers at the end of last week to deepen crude output cuts in early 2020.

The price drop also put an end to a strong run in previous sessions fuelled by hopes for the OPEC+ production curb deal. On Friday, Dec.6, OPEC+ agreed to deepen their output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd, representing about 1.7% of global production. This decision crystallises an important shift in strategy to managing short-term physical imbalances rather than trying to correct perceived long-term imbalances through open-ended commitment.

Goldman Sachs revised its Brent spot price forecast to $63 per barrel for 2020, up from a previous estimate of $60. The strong compliance with the OPEC+ along with positive economic developments such as a U.S.-China trade deal could push Brent to $70 a barrel before the second quarter of 2020.

The combination of raising the production cuts to 1.7 million barrels per day (mb/d), plus the unilateral over-compliance by Saudi Arabia, adding another 400,000 bpd of additional cuts, surprised the market last week. In addition, Saudi Arabia hopes to apply pressure to all member countries to comply with their allotted reductions. Oil prices jumped immediately after the deal was announced. One of the questions was how the group would allocate the additional cuts. Here is a quick rundown of a few key figures:
• Saudi Arabia agreed to cut by another 167,000 bpd (while also including 400,000 in voluntary cuts)
• The UAE: 60,000 bpd
• Kuwait: 55,000 bpd
• Iraq: 50,000 bpd
• Russia: 70,000 bpd
 
There are smaller contributions from the rest of the group.

Oil Future closed 9th December;
Brent: 64.25 (-0.14) usd/barrel
WTI: 59.02 (-0.18) usd/barrel
NY Harbor Ulsd: 598.54 (-2.43) usd/mton
Gasoil ARA: 586.25 (-1.00) usd/mton

Oil Futures trading at GMT 07.22; Brent: -1 cent, WTI -4 cents

We expect bunker prices little change today (Dec. 10) but tendency is slightly downward.