MABUX: Bunker market this morning, Mar 02

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 trend on Feb. 28:

380 HSFO – USD/MT: 344.29 (-4.75)
VLSFO – USD/MT: 476.00 (-19.00)
MGO – USD/MT: 552.21 (-13.31)

Meantime, world oil indexes also declined on Feb.28.

Brent for April settlement decreased by $1.66 to $50.52 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for April fell by $2.33 to $44.76 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.76 to WTI. Gasoil for March delivery declined by $4.25.

Today morning oil indexes rise as hopes that a bigger than expected production cut from OPEC and stimulus from central banks could offset economic gloom from the coronavirus outbreak.

Oil indexes fell than more 15% last week, the biggest weekly drop since 2008 that pushed crude prices to under $50 a barrel.

The World Health Organization said on Feb.28 it had raised its worldwide risk assessment on the coronavirus to “very high” from high. Previously, only China, where the outbreak started, had been designated the very high-risk assessment. Analysts say the main reason for the panic was uncertainty on how much worse the pandemic could get and how much longer it could last, with the global death toll already at above 2,800 amid 83,000-odd infections. But some think the virus may just “go away” as the warmth of the spring and summer months beckon.

The market now await to see if the OPEC+ alliance of oil producers — led by Saudi Arabia and Russia — could agree to cut more than one million barrels per day from global production to stop the market’s bleeding. Several key OPEC members are leaning towards a bigger than previously expected oil output cut as oil prices fell to $50 per barrel on fears the coronavirus outbreak will hit oil demand badly. Saudi Arabia, the biggest producer in OPEC, and some other members are considering agreeing an output cut of 1 million barrels per day (bpd) for the second quarter of 2020, more than an initially proposed cut of 600,000 bpd. They are scheduled to meet on March 5-6 in Vienna to decide further policy.

While Saudi Arabia supports a further output cut, Russia has yet to announce its final position on the matter. Moscow has a history of only agreeing to OPEC+ actions at the last minute, after initial reluctance. Russian Energy Minister Alexander Novak said on Feb.27 that Russia was “very satisfied” with its cooperation with Saudi Arabia and wanted to continue this within OPEC and non-OPEC frameworks, as well as bilaterally.

Libya’s oil production stood at 120,568 barrels per day (BPD) as of Friday, the National Oil Corporation said. The NOC statement added that losses from an oil blockade in the country exceeded $2.3 billion. Forces allied to eastern commander Khalifa Haftar closed major oil ports and fields more than a month ago in a power-play with the Tripoli-based government.

Baker Hughes reported that the number of oil and gas rigs in the US fell last week by 1 to 790, with the total oil and gas rigs clocking in at 248 fewer than this time last year. The number of oil rigs decreased for the week, by 1 rig, bringing the total to 678—a 165-rig loss year over year. The total number of active gas rigs in the United States stayed the same according to the report, at 110. This compares to 195 a year ago.

Meanwhile, oil production held steady at 13 million bpd for the third week in a row, according to data provided by the Energy Information Administration.

At the same time U.S. crude production pulled back in December from record highs reached a month earlier. U.S. oil output fell to 12.78 million barrels per day in December from 12.86 million bpd in November, the U.S. Energy Information Administration (EIA) said in its Production Supply Monthly report. The decline was the first pull-back since July.

We expect bunker prices may continue downward trend today: 8-10 USD down for IFO, 3-5 USD down for MGO.