MABUX: Bunker market this morning, Mar 05

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 Mar. 04:

380 HSFO - USD/MT 347.93 (+0.73)
VLSFO - USD/MT 474.00 (-2.00)
MGO - USD/MT 559.45 (+2.47)

Meantime, world oil indexes also demonstrated irregular changes on Mar. 04 on expectations that major producers have moved closer to an agreement to enact deeper output cuts aimed at offsetting the slump in demand caused by the coronavirus outbreak.

Brent for May settlement decreased by $0.73 to $51.13 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for April fell by $0.40 to $46.78 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.35 to WTI. Gasoil for March delivery increased by $2.00.

Today morning oil indexes rise ahead of an OPEC meeting in which Saudi Arabia is expected to push the group and its allies including Russia to agree to further output cuts to support the market.

Saudi Arabia and other OPEC members are seeking to persuade Russia on Mar.04 to join them in large additional oil output cuts to prop up oil prices. A technical panel of several representatives from OPEC states, Russia and other producers recommended on Mar.03 cutting output by between 0.6-1.0 million barrels per day (bpd) during the second quarter only. Iran's oil minister Bijan Zanganeh said the market was facing a surplus.

At the same time, Russia has opposed Saudi Arabia's plan to deepen OPEC+ cuts by 1.2 million barrels per day on Mar.04. Russia had so far said that it might be willing to extend existing cuts, which expire in March, but might find it difficult to sign up for deeper cuts. Russian Energy Minister Alexander Novak, who had held talks with his Saudi counterpart, left the meeting Joint Ministerial Monitoring Committee, after more than three hours of talks.

Goldman Sachs cut its Brent price forecast, to $45 a barrel in April, while expecting Brent gradually recovering to $60 a barrel by the year-end. Morgan Stanley also cut its second-quarter 2020 Brent price forecast to $55 per barrel and its WTI outlook to $50 on expectations that China's 2020 oil demand growth would be close to zero and that demand elsewhere may weaken because of the coronavirus.

The U.S. Federal Reserve cut interest rates on Mar.03 in a bid to shield the world's largest economy from the impact of the coronavirus, but the decision offered only limited support for crude.

According the Energy Information Administration U.S. crude oil stockpiles rose less than analysts expected last week - by 785,000 barrels. It was expected a build of 2.64 million barrels. That aspect also supported oil indexes. Gasoline inventories fell by 4.34 million barrels, versus forecasts for a decline of about 2.1 million barrels. Distillate stockpiles dropped by 4 million barrels, compared with expectations for a drawdown of 1.93 million barrels.

Crude production for the week ended Feb. 28 hit a record high of 13.1 million barrels per day versus the previous peak of 13 million bpd.

We expect bunker prices may continue multidirectional changes today: 2-4 USD down for IFO, 1-3 USD up for MGO.