MABUX: Bunker market this morning, Dec 24

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 irregular changes on December 23:

380 HSFO - USD/MT - 374.80(+5.88)
180 HSFO - USD/MT – 403.79(-5.03)
MGO - USD/MT – 692.27(-0.69)

Meantime, world oil indexes were stable at the end of Dec.23 as Russia said an OPEC-led producer group may consider easing output cuts next year, offsetting support from some investor optimism that an initial U.S.-China trade deal would be signed soon.

Brent for February settlement increased by $0.25 to $66.39 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for February rose by $0.08 to $60.52 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.87 to WTI. Gasoil for January delivery declined by $1.00.

Today morning oil indexes are rising slightly after Russia voiced support for the market.

Russian energy minister, Alexander Novak, said Russia would continue cooperating with the OPEC in supporting the market as long as it is "effective and brings results". However, he added that the group may consider easing the output restrictions at its meeting in March. In November, OPEC and other producers agreed to extend and deepen output curbs that have been in place since 2017. The cut in output could see as much as 2.1 million bpd taken off the market, which is around 2% of global demand. Cooperation would continue "until the market requires it". Non-OPEC global supply is expected to rise next year due to higher output from countries including the United States, Brazil, Norway and Guyana, which became an oil producer last week.

Analysts also predict a second weekly decline in U.S. crude inventories. U.S. producers have been meeting the gaps in the market by pumping larger amounts of crude. It reaching a record high of around 13 million bpd in November. That has pumped up inventories, which have been largely resistant to drawdowns. U.S. stocks are up around 1% this year. A preliminary Reuters poll expects crude stocks to have fallen by about 1.8 million barrels last week, a second week of declines. But gasoline stocks are expected to have gone up for a seventh week in a row. Distillate inventories are also expected to rise for a fifth consecutive week.

Another source of more oil could emerge in the coming months after Kuwait indicated that a longstanding dispute over the “Neutral Zone” on its border with Saudi Arabia will be resolved by the end of 2019. Production at two large oil fields in the Neutral Zone was halted more than three years ago, cutting output by some 500,000 barrels per day.

Oil prices have risen since the United States and China agreed on a so-called Phase 1 trade deal earlier this month following months of negotiations that unsettled markets. President Donald Trump said on Dec.21 the United States and China would “very shortly” sign the pact. Under the pact, the United States is expected to agree to reduce some tariffs in return for a big increase in purchases of U.S. agricultural products by Chinese importers.

Data showing that U.S. energy companies added the most oil rigs last week since February 2018, primarily in the Permian shale basin, also put pressure on prices.

We expect bunker prices will demonstrate little changes today: within plus/minus 1-3 USD.