MABUX: Bunker market this morning, Feb 26

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 continued downward changes on Feb. 25:

380 HSFO - USD/MT 356.51 (-4.31)
VLSFO - USD/MT 517.00 (-13.00)
MGO - USD/MT 577.98 (-12.77)

Meantime, world oil indexes demonstrated irregular changes on Feb.25 amid the growing coronavirus contagion.

Brent for April settlement decreased by $1.35 to $54.95 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for April fell by $1.53 to $49.90 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.05 to WTI. Gasoil for March delivery added $0.25.

Today morning oil indexes rise slowly amid correction.

Fears of coronavirus pandemic escalated after the coronavirus spread to more countries, while Iran's virus death toll rose to 16, the highest outside China, and infections worsened in South Korea and Italy. The U.S. Centers for Disease Control and Prevention said a spread of Covid-19 in the U.S. was "inevitable" and warned Americans to prepare for disruptions in their daily lives, leading another mass selling of stocks and buying of bonds. South Korea aims to test more than 200,000 members of a church at the center of a surge in coronavirus cases. The virus is also in the Middle East.

The head of the International Energy Agency (IEA) said on Feb.25, that the coronavirus outbreak could hit global oil demand growth more than currently expected, adding that the agency could additionally trim its oil demand growth projections. Earlier this month, the IEA said in its Oil Market Report (OMR) that the coronavirus outbreak would lead to the first quarterly contraction in global oil demand in more than 10 years. The IEA slashed its 2020 oil demand growth forecast by 365,000 bpd to just 825,000 bpd—which would be the lowest oil demand growth since 2011. Now, according to the IEA’s Birol, even this lowered projection could be further revised downwards due to the coronavirus outbreak.

Earlier this month, OPEC also slashed its global oil demand growth forecast for 2020, expecting the coronavirus outbreak to weigh heavily on fuel demand in the world’s oil demand growth driver, China. OPEC slashed its oil demand growth estimate by 230,000 bpd from last month’s assessment and now sees global oil demand growth at just below 1 million bpd this year—at 990,000 bpd.

Concern about the demand impact from the virus has pushed oil indexes down despite the shutdown of most of Libya's output and a supply pact between the Organization of the Petroleum Exporting Countries (OPEC) and allies. Prices received further support as lawmakers based in areas of eastern Libya on Feb.24 said that they would not participate for now in peace talks.

Potential support for prices could also come from OPEC and allies including Russia, which are considering whether to curb output further. However, scepticism is growing about the chance of further action. Producers are due to meet in Vienna over March 5-6 to decide policy. Saudi Arabia's energy minister on Feb.25 said OPEC+ should not be complacent about the coronavirus. But Russia has yet to announce its position on further curbs.

U.S. President Donald Trump has decided to step up a sanctions campaign on Venezuela’s oil sector and will be more aggressive in punishing people and companies that violate it, the top U.S. envoy to the Latin American country said. The United States imposed sanctions to choke off Venezuela’s oil exports in the aftermath of Maduro’s 2018 re-election, which was widely described as fraudulent. But customers in China, India and elsewhere continued importing, so Venezuelan state-oil company PDVSA’s exports only fell by about a third. Washington had not followed through on threats to extend the sanctions on any foreign company doing business with PDVSA – until last week, when it blacklisted Rosneft Trading, a subsidiary of Russian energy giant Rosneft, to pressure Moscow. U.S. Special Representative for Venezuela Elliott Abrams said, that there will be more sanctions as Washington plans to go after continued customers of Venezuelan oil, including those in Asia, and target intermediaries helping Caracas hide the origin of its oil.

The American Petroleum Institute (API) estimated on Feb.25 a smaller than anticipated crude oil inventory build of 1.3 million barrels for the week ending February 21, compared to expectations of a 2.467-million-barrel  build.

We expect bunker prices may demonstrate irregular changes today: 5-8 USD down for IFO, Prices for MGO may change in a range of plus/minus 1-3 USD.