MABUX: Bunker market this morning, Apr 27

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) for the first time in last 7 days turned up on Apr.24:

380 HSFO - USD/MT - 212.58 (+6.14)
VLSFO - USD/MT – 241.00 (+7.00)
MGO - USD/MT – 327.87 (+6.18)

Meantime, world oil indexes changed irregular on Apr.24 gaining further ground as some producers said they would move to cut output swiftly to try to counter the evaporation in global demand for fuels caused by the coronavirus pandemic.

Brent for June settlement increased by $0.11 to $21.44 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June delivery rose by $0.44 to $16.94 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.50 to WTI. Gasoil for May delivery lost $22.75.

Today morning global oil indexes have turned into slight downward trend again.
 
The World Bank slashed its outlook for oil and metals prices. Crude oil prices are expected to average $35 a barrel this year, down 43% from the average in 2019 - a sharp downward revision from its October forecast. The organization recommended that world governments reform energy subsidy programs to free up funds for emergency coronavirus response, and advised against the use of tariffs or other trade protections to shield domestic industries.

U.S. petroleum consumption has fallen by a third since the economy went into lockdown in March but showed signs of stabilising last week. Lockdown has caused the biggest economic interruption since the depression of the 1930s and the largest interruption in oil consumption since the birth of the modern petroleum industry in the 1860s. The challenge now is for domestic oil producers, importers and refiners to adjust to a prolonged period of lower consumption and bring the increase in inventories under control before storage space runs out. In response to lower demand, U.S. refiners cut crude processing to 12.5 million bpd last week, down from 15.8 million bpd five weeks ago and 16.5 million bpd at the same point a year ago.

U.S. total stocks of unrefined crude and products, excluding the strategic petroleum reserve, increased by a further 25.5 million barrels and have risen by a total of 109 million barrels in the last five weeks. In crude alone, stocks rose 15 million barrels and are now up 65 million barrels since March 13. Nationwide, crude storage capacity is now 60% full, up from 50% five weeks ago and 52% at the same point a year ago. However, there is still capacity to store another 262 million barrels, with most of the unused space on the Gulf Coast where there is still room for 156 million barrels. Cushing’s storage is 76% full, up from 48% five weeks ago. If Cushing space continues to tighten, the Chicago Mercantile Exchange, which operates the U.S. light sweet crude futures contract, will need to take steps to ensure the contract remains useable.

As per Vortexa, the volume of key oil products held in floating storage around the globe has more than doubled in the past month to about 68 million barrels. The figure, which includes gasoline, diesel and jet fuel as of April 22, compares with around 30 million barrels in the previous month. Traders around the world have been trying to book tankers of different sizes to store oil products. Floating storage has increased in northwest Europe, the Mediterranean, the Gulf of Mexico, Fujairah in the United Arab Emirates and Singapore, as well as at other locations.

Baker Hughes reported that the number of oil and gas rigs in the US fell again this week by 64, falling to 465, with the total oil and gas rigs clocking in at 526 fewer than this time last year as U.S. drillers make significant changes to their operations. The number of oil rigs decreased for the week by 60 rigs, according to Baker Hughes data, bringing the total to 378—a 427-rig loss year over year. It is the fewest number of active oil rigs since July 2016. The EIA’s estimate for the week is that oil production in the United States fell to 12.2 million barrels of oil per day on average for week ending April 24, which is 900,000 bpd off the all-time high and 100,000 bpd lower than the week prior. It is the lowest production level since May last year.

Russia agreed to take unprecedented volumes of crude off the market under a new OPEC+ agreement in April, in response to dire crude demand forecasts and storage concerns. Russia has signed up to cut 2.5 million bpd in May and June, 2 million bpd from July to December, and 1.5 million bpd from the start of 2021 to the end of April 2022. Its baseline for these cuts is 11 million b/d. These volumes are significantly greater than Russia’s commitments under previous OPEC+ agreements, and pose a major challenge for Russian oil companies.

We expect IFO bunker prices will not change significantly today, MGO prices may go down in a range of minus 10-18 USD.