MABUX: Bunker market this morning, Apr 17

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) slipped lower on Apr 16:

380 HSFO: USD/MT 235.77 (-5.52)
VLSFO: USD/MT 272.00 (-8.00)
MGO: USD/MT 360.43 (-5.20)

Meantime, world oil indexes rose on Apr.16 after sharp losses in the previous session, with investors hoping that a big build-up in U.S. inventories may mean producers have little option but to deepen output cuts.

Brent for June settlement increased by $0.13 to $27.82 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May delivery unchanged - $19.87 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $7.95 to WTI. Gasoil for May delivery gained $10.25.

Today morning global oil indexes  do not have any firm trend so far.
 
U.S. stockpiles posted another huge build last week - by 19.25 million barrels - as demand destruction from the Covid-19 pandemic continued. That compared with expectations for a build of about 11.7 million barrels. That brings the rise in inventories to nearly 50 million barrels in three weeks. The U.S. Energy Information Administration data showed large U.S. refined fuels stock builds despite refiners operating at 69% of capacity nationwide, the lowest since September 2008.

The International Energy Agency (IEA) in turn reported that the impending global oil inventory build is threatening to fill all the available storage in the world over the next few weeks. The demand loss due to the coronavirus pandemic could result in a stock build of 12 million barrels per day (bpd) in the first half 2020, despite the OPEC+ decision to cut collective production by 9.7 million bpd in May and June. The global storage capacity may be overwhelmed by the middle of this year. Still, there are already signs of logistics strains in many places around the world and at other parts of the logistics chain, such as competition for buying space on pipelines systems. At many sites, it’s not possible to store different crude grades, while some crudes and oil products need special tanks for storage.

The IEA considers, one factor that could alleviate the glut and create extra headroom for the impending stock build-up is the fact that China, India, Korea, and the United States have either offered their strategic storage capacity to industry to temporarily park unwanted barrels or are considering increasing their strategic stocks to take advantage of lower prices.

The Organization of the Petroleum Exporting Countries cut its forecast for 2020 oil demand by 6.9 million barrels a day. That reflects a contraction in demand of 12 million barrels a day in the current quarter, with April bearing the brunt with a 20 million barrel a day fall. As per OPEC, considering latest developments, and the large uncertainties going forward, downward risks remain significant, suggesting possibility of further adjustments, especially in the 2Q, should new data and further developments warrant revisions.

The transition to the International Maritime Organization’s global low sulfur mandate and the high sulfur fuel oil carriage ban has been relatively smooth so far but inspections are set to drop as the focus has shifted to containing the coronavirus’ spread, with safe bunkering practices, crew changes and continuity of the global supply chain in shipping receiving more attention. Some port states may suspend enforcement measures. The restrictions on ship personnel at some ports is also making testing bunker samples difficult.

We expect IFO prices will stay unchanged today while MGO prices may add plus 8-10 USD.