MABUX: Bunker market this morning, June 09

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 June 08:

380 HSFO: USD/MT 287.05 (+9.61)
VLSFO: USD/MT 330.00 (+12.00)
MGO: USD/MT 400.88 (+11.53)

Meantime, world oil declined on June, 08 despite a group of major oil producers agreeing to extend record production cuts.

Brent for August settlement decreased by $1.50 to $40.80 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for July fell by $1.36 to $37    .41 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.61 to WTI. Gasoil for June delivery lost $0.50.

Today morning oil indexes rise on growing confidence in a global recovery with pandemic lockdowns easing.

Over the weekend, OPEC+ agreed to extend massive output cuts by an extra month, with the group’s leaders-- Saudi Arabia and Russia--also persuading other group members to fulfill their promises to reduce production. However, Saudi Arabia, Kuwait and the United Arab Emirates would not extend an additional 1.18 million bpd in cuts on top of the OPEC+ cuts in July. At the same time, Libya, which has been out of the market since January, has resumed producing. This extension is expected to tighten markets in the foreseeable future as countries ease lockdown measures and demand picks up.

The Joint Technical Committee, which reviews market conditions on behalf of the OPEC+ alliance, will meet on June 17 while the Joint Ministerial Monitoring Committee, which monitors the compliance and production quotas of OPEC+ members, will meet a day later.

Meanwhile, Saudi Arabia sharply raised its official selling prices for crude oil, removing almost completely the deep discounts it had in place to preserve its market share during the price war it waged on Russia in March. The target of the price hikes will be Asia, the Saudis’ largest export market. It would be the sharpest price rise in at least twenty years, which in turn followed the sharpest cut in prices in 30 years. However, Asian oil buyers have likely gotten used to cheap oil. They have also likely filled their storage facilities during the crisis, especially in China. This might mean that orders for Saudi oil further down the road may decline. At the same time, there is a possibility, that other Gulf producers might do the same. This has already raised concern among not just Asian but also European refiners.

China’s crude oil imports in May jumped to the highest in history ever, at 11.34 million bpd, customs data showed, confirming an earlier report by analytics firm OilX, which had calculated China’s May imports at 11.11 million bpd. The data also confirms that China’s economy is on the fast track to recovery from the coronavirus crisis, with the May daily average of oil imports up by 15 percent from April and 150,000 bpd more than the previous import record that Chinese buyers set last November. There is a fact of recovering demand for fuel – the traffic has been on a strong rebound in the past couple of weeks as people feel safer in their personal cars than in public transport. Refinery demand has been particularly strong from independent refiners (the so-called teapots), who have been running their refineries at near-record rates since last month.

We expect bunker prices may demonstrate downward changes today: 7-10 USD down for IFO, 1-3 USD down for MGO.