MABUX: Bunker market this morning, Feb 17

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 demonstrated downward changes on February 14:

380 HSFO - USD/MT 361.99 (-0.78)
VLSFO - USD/MT 541.00 (-2.00)
MGO - USD/MT 597.29 (-1.35)

Meantime, world oil indexes increased on Feb. 14 on hopes, that the economic impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown.

Brent for April settlement increased by $0.98 to $57.32 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March rose by $0.63 to $52.052 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.27 to WTI. Gasoil for March delivery added $2.00.

Today morning oil indexes eased as hopes for an OPEC+ emergency meeting on the virus faded, while investors assessed Chinese stimulus measures to soften the outbreak’s economic impact.

Brent has fallen around 15% year to date in part due to worries the coronavirus outbreak would stunt the global economy. However, market sentiment improved as factories in China started to reopen and the government eased monetary policy in the world’s second largest economy. At the same time, China today offered more funding to banks and cut the interest rate it charges for the money to cushion its economy. Singapore has also promised a “strong” package of budget measures and central banks in the Philippines, Thailand and Malaysia have cut interest rates as Asian economies grapple with the virus-induced slowdown.

The International Energy Agency (IEA) said the outbreak should knock first-quarter oil demand down from a year earlier for the first time since the financial crisis in 2009. The International Energy Agency (IEA) revised its oil demand forecast, predicting consumption will actually contract by 435,000 bpd. Previously, the agency expected consumption to increase by 800,000 bpd from a year earlier. For the full-year in 2020, the IEA cut demand growth by 365,000 bpd to just 825,000 bpd. That would be the lowest annual increase since 2011, and slightly below the growth figures for 2019, which itself was a down year.

In response to the demand slump, OPEC+, are considering deepening production cuts. Russian said it has not yet reached a decision on further output curbs. But a growing oil glut in Russia and the promise of a flood of dollars from the sale of a leading bank (Sberbank) are strengthening the case.

According to the latest report of OPEC, Iran produced 2.086 million barrels of crude oil per day in January 2020. That shows a decrease of 9,000 barrels compared to December 2019. According to the same report, OPEC members produced 28.859 million barrels of crude oil in January 2020, while the figure shows a fall of 509,000 barrels in comparison with the month before.

On February 8, Iranian Minister of Oil Bijan Namdar Zangeneh said the country could support deeper cuts in crude oil output of the OPEC+ if a majority of the members agreed with it. Zangeneh said if an early ministerial meeting was to be held, an agreement had to be made prior to the meeting rather than discussing an agreement during the meeting.

According to the Baker Hughes Co, U.S. energy firms added oil rigs for a second week in a row as crude prices, which have dropped about 15% this year, were set to rise this week as concerns began to ease over the long-term economic impact of the coronavirus. Companies added 2 oil rigs last week, bringing the total count to 678. In the same week a year ago, there were 857 active rigs.

We expect bunker prices may rise today: 3-5 USD up for IFO, 1-3 USD up for MGO.