MABUX: Bunker market this morning, Apr 06

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 increased on April 03:

380 HSFO: USD/MT 249.98 (+8.97)
VLSFO: USD/MT 305.00 (+7.00)
MGO: USD/MT 392.73 (+6.78)

Meantime, world oil indexes increased on Apr. 03 as OPEC delegates tried to keep alive talk of production cuts.

Brent for June settlement increased by $4.17 to $34.11 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May rose by $3.02 to $28.34 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.77 to WTI. Gasoil for April delivery added $21.00.

Today morning oil indexes decline as OPEC+ delayed a meeting to Thursday.

Trump tweeted on Apr.02 that he had brokered a deal for Saudi Arabia, Russia and other oil producers to cut between 10 million and 15 million barrels of supply from daily world output. At the same time, the meeting planned for Apr.06 between officials of OPEC, Russia and other oil producers, which had buoyed hopes for a deal to end the turmoil in energy markets, has been put off.

The news comes as tensions have surfaced once again between Saudi Arabia, OPEC’s de facto leader, and Russia over who is to blame for the recent collapse in oil prices. On Apr.03, Russian President Vladimir V. Putin partly blamed Saudi Arabia for the price drop. The Saudis responded with angry statements from their ministers of foreign affairs and energy blaming Russia.

At the same time, according to the International Energy Agency (IEA), even if the OPEC+ group and other major oil producers in the world were to agree to deep production cuts, they would be unable to prevent what is sure to be an enormous global inventory build this quarter due to unprecedented demand destruction. The measures many countries have taken to try to flatten the curve of the coronavirus pandemic are destroying unprecedented volumes of oil demand as more than 3 billion people—from India to Europe to the United States—remain in lockdown. As a result of restricted commuter travel, grounded flights, and economic slowdown, demand for oil in April is expected to drop by 20 million bpd year on year, and probably more.

Even if OPEC+ plus other producers were to discuss, agree to, and implement a collective cut of 10 million bpd, global oil inventories would still rise by 15 million bpd in the second quarter.

Iraq’s oil minister said on Apr.05, that any new output cuts agreement among OPEC+ member, should be backed by countries outside the 23-member alliance, such as the US, Canada and Norway. So far, Norway has indicated it would join production cuts as part of a broad international effort.

Crude prices were also supported on Apr.03 by data showing that U.S. drillers had cut the number of rigs actively pumping oil by 62 last week to 562 this week, the most in a week since 2015. That followed decline of 40 oil rigs the week before. The total active U.S. rig count, meanwhile, also declined by 64 to 664. The rig count data was evidence that shale drillers in America, who had contributed too much of the global oil glut, were already paring output even before Trump's intervention last week.

Industry regulators in Texas, the largest U.S. oil producing state that churns out some 4 million barrels per day, have indicated they are ready to work with their oil drillers for cuts. But Trump, who met CEOs of some of the biggest oil companies such as ExxonMobil and Chevron at the White House on Apr.03, said that he offered no cuts on behalf of American industry — ostensibly due to U.S. antitrust regulations that forbid any coordination of production controls.

We expect bunker prices to increase today: 15-17 USD up for IFO, 15-20 USD up for MGO.