MABUX: Bunker market this morning, June 11

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 10:

380 HSFO: USD/MT 287.08 (+2.75)
VLSFO: USD/MT 333.00 (+4.00)
MGO: USD/MT 406.90 (+3.77)

Meantime, world oil indexes also demonstrated upward changes on June, 10.

Brent for August settlement increased by $0.55 to $41.73 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for July rose by $0.66 to $37    .41 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.13 to WTI. Gasoil for June delivery added $7.00.

Today morning oil indexes decline after the Energy Information Administration reported a rise in U.S. crude oil inventories.

According to the Energy Information Administration (EIA) stockpiles of U.S. crude rose sharply, confounding analyst expectations. Oil inventories jumped 5.7 million barrels for the week ended June 5. That compared to estimates for a draw of 1.7 million barrels. A day earlier, the American Petroleum Institute reported a crude oil inventory build of 8.42 million barrels, which caused prices to dive after several days of gains. The gasoline inventories also increased by 900,000 barrels for the last week, down from a build of 2.8 million barrels a week earlier. Gasoline production last week averaged 8.1 million bpd, compared with 7.8 million bpd a week earlier.

At the same time, there was downward pressure following news that U.S. producers were restarting production and worry that some Middle East producers, notably Iraq, will continue to produce more than their OPEC+ quota calls for.

Meanwhile, Norwegian consultancy Rystad Energy warned that deep production cuts could lead to a lasting deficit of oil, beginning as soon as this month. This could provide some support for oil prices especially if it is coupled with more positive news on the demand side.

Global growth will contract by 7.6% in 2020, the OECD said, assuming there is a second wave of Covid-19 infections, and even if a second wave is avoided there would still be a drop of 6%. This is even worse than the 5.2% contraction in 2020 the World Bank predicted on June,08.

The World Health Organization stated earlier this week that new coronavirus cases have reached their highest ever level, pointing to key regions, such as the Americas and Southeast Asia. This suggests a second wave of the pandemic is not a distant possibility any more, and that would plunge oil demand right back down to lockdown levels.

The U.S. Federal Reserve’s grim warming on June, 10 that U.S. recovery from the COVID-19 virus will be a long and tough road also soured market’s sentiment. The U.S. economy is predicted to shrink by 6.5% and the unemployment rate to 9.30% by the end of the year. Meanwhile, the U.S. recorded almost 2 million COVID-19 cases as of June 11, according to data from Johns Hopkins University.

The oilfield Sharara in Libya was shut down again on June.09, after an armed force had told the workers on the field to stop working. NOC declared force majeure on Sharara oilfield crude exports two days after restarting production following months of blockade amid Libya’s civil. The El Feel oilfield in Libya is also shut down again. Libya’s oil industry has been in total disorder after a group of paramilitary formations affiliated with the Libyan National Army (LNA) of eastern Libyan strongman General Khalifa Haftar occupied Libya’s oil export terminals in January along with pipelines and fields. The blockade came amid continued fighting between the LNA, which is loyal to the eastern Libyan government, and the forces loyal to the Government of National Accord (GNA), which is recognized by the United Nations.  Last week, the GNA said it had taken full control of Tripoli from Haftar’s LNA.
 
We expect bunker prices may demonstrate upward changes today: 2-4 USD up for IFO, 5-7 USD up for MGO.