MABUX: Bunker market this morning, Jan 31

The Bunker Review was contributed by Marine Bunker Exchange (MABUX)

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs declined on January 30:

380 HSFO: USD/MT – 371.85 (-1.57)
VLSFO: USD/MT – 584.00 (-1.00)
MGO: USD/MT – 632.18 (-2.14)

Meantime, world oil indexes also fell on Jan.30 after a surprise increase in U.S. crude inventories compounded fears of falling demand from a virus-hit China.

Brent for March settlement decreased by $1.52 to $58.29 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March fell by $1.19 to $52.14 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $6.15 to WTI. Gasoil for February delivery lost $14.25.

Today morning oil indexes demonstrate upward changes as the World Health Organization (WHO) came out against travel and trade restrictions in declaring a global emergency over the spread of the coronavirus that originated in China last year.

The WHO on Jan. 30 declared that the coronavirus outbreak in China - which has killed more than 200 people there and has spread to some 18 countries - now constitutes a public health emergency of international concern. At the same time it declared that travel and trade restrictions were not necessary. Italy's government decided to close all air traffic between Italy and China, and airlines including Air France, American Airlines and British Airways have stopped flying to Chinese cities.

Analysts are cutting their forecasts for Chinese crude consumption due to the virus, with jet fuel demand most affected. Morgan Stanley said consumption growth could take a 75,000 barrel-a-day hit if the outbreak continues to escalate for three to four months. As a result the OPEC is considering moving up its March meeting. Saudi Arabia has opened a discussion about moving an upcoming output policy meeting to early February from March following the recent slide in oil prices. It is likely that OPEC would meet as early as next week.

The market still seems to be ignoring the loss of nearly 1 million barrels a day of output from OPEC member Libya due to the recent escalation of its civil war. Data published by the national oil company on Jan.30 showed current production running 930,000 b/d below capacity.

At the same time, as the Libyan National Army’s blockade of the country’s oil ports enters a second week, the urgency with which European oil traders are seeking alternatives to fill the 1 million b/d hole is growing. Shipping data for February shows Repsol, OMV, Unipec, Saras and ENI among the regular charterers of vessels from Libya, and the lost barrels are equivalent to more than a fifth of the total refinery throughput for the Mediterranean.

The U.S. Energy Information Administration reported that crude supplies in the country rose by 3.5 million barrels for the week - the largest weekly climb since the 7.9 million barrel rise in early November. Gasoline inventories were up by 1.2 million barrels, compared with forecasts for a rise of 1.3 million barrels. Distillate stockpiles fell by 1.3 million barrels, versus consensus expectations for a draw of about 1.1 million barrels.

We expect bunker prices may continue to decline today: 7-9 USD down for IFO, 12-14 USD down for MGO.