MABUX: Bunker market this morning, Feb 20

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 irregular changes on February 19:

380 HSFO: USD/MT 364.61 (+1.96)
VLSFO: USD/MT 533.00 (-2.00)
MGO: USD/MT 594.74 (-2.19)

Meantime, world oil indexes increased on Feb. 19 amid broad optimism as new coronavirus cases fell for a second day in China and concerns rose over supply after a U.S. move to cut more Venezuelan crude from the market.

Brent for April settlement increased by $1.37 to $59.12 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for April rose by $1.24 to $53.29 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.83 to WTI. Gasoil for March delivery added $13.00.

Today morning oil indexes continue to rise as the market shifted focus to supply disruptions, while demand concerns eased after a sharp drop in new coronavirus cases at the epicenter of the outbreak.

China is still struggling to get manufacturing going again in the world's second-largest economy, after imposing stringent city lockdowns and travel restrictions to contain the virus that has now killed more than 2,000 people, but the market remains optimistic that the economic fallout may be short-lived. Official data showed that new cases in China fell for a second straight day, although the World Health Organization has cautioned there is not enough data to know if the epidemic was being contained.

Oil indexes were also supported by a U.S. decision on Feb.18 to blacklist a trading subsidiary of Russia's Rosneft. The United States slapped sanctions on Rosneft Trading SA, the Geneva-based unit. The restrictions come with a three-month wind-down period that expires May, 20. Washington said Rosneft have maintained ties with Venezuela’s Nicolas Maduro and its state-run oil company, while the Russian producer called the sanctions illegal and ungrounded.

Also, there are still hopes that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will deepen supply cuts. The groupe, known as OPEC+, has been withholding supply to support prices and meets next month to decide a response to the downturn in demand resulting from the coronavirus epidemic. OPEC+ members are due to meet in Vienna on March 5-6 to discuss next steps on supporting the market from the impact of Covid-19.

But in the U.S., which is not party to any supply cut agreements, crude oil production has been rising as shale output grows. Shale production in the U.S. is expected to rise to a record 9.2 million barrels a day next month, according to the Energy Information Administration.

Escalating tensions in Libya threatened global crude supply. Libya’s oil output is down to less than 125,000 b/d, a drop of more than 90% since the Libyan National Army imposed a blockade on the country’s five export terminals on January 18. The total cumulative loss amounts to 29.4 million barrels, or $1.74 billion. NOC Chairman Mustafa Sanalla has warned that output would plummet to just 72,000 b/d “very soon” if the LNA blockade continued. The self-styled LNA has been jostling for power with the UN-backed Government of National Accord. NOC has declared force majeure on exports from five key export terminals that were shut by the LNA, which controls Libya’s oil and gas infrastructure but lacks control over the sale and distribution of revenue.

Meanwhile, U.S. industry data showing a bigger-than-expected build in crude oil inventories helped to cap the price gains. U.S. crude stocks rose by 4.16 million barrels last week, compared with analyst expectations for a build of 2.5 million barrels, according to the American Petroleum Institute.

We expect bunker prices may rise today: 4-6 USD up for IFO, 10-13 USD up for MGO.