Bunker Market this morning, 22 July, 2020
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
Yesterday Tuesday evening oil prices closed up on virus vaccine hopes, and EU stimulus deal.
Oil prices rose about $1 a barrel on Tuesday, hitting the highest level in more than four months with a boost from a European Union stimulus deal and hopeful news about coronavirus vaccine trials.
Brent crude futures settled at $44.32 barrel, rising $1.04, or 2.4%. West Texas Intermediate (WTI) settled at $41.96 a barrel, gaining $1.15, or 2.8%.
Prices pared gains in post-settlement trade after the American Petroleum Institute, an industry group, reported U.S. crude inventories grew last week by 7.5 million barrels compared with expectations for a draw of 2.1 million barrels.
Oil was buoyed by an agreement among European Union leaders on a 750 billion-euro ($859 billion) fund to prop up coronavirus-hit economies.
The EU deal allows the European Commission to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration.
World shares and the euro also hit their highest levels in several months. The dollar, in which most oil contracts are priced, fell to its lowest since March against a basket of currencies.
Oil prices were supported by promising coronavirus vaccine data released on Monday, though a vaccine remained months away at best. Several companies are testing new drugs for immunity to COVID-19.
Oil prices also drew support from expectations that U.S. lawmakers could soon agree on a new stimulus package, as extended unemployment aid for millions of Americans will expire at month-end.
“Apparent progress on the U.S. stimulus deal, the EU recovery agreement and progress toward a successful vaccine have all merged this week to kick up demand for risky assets,” said Jim Ritterbusch of Ritterbusch and Associates.
Countries including the United States and India are reporting record numbers of coronavirus infections and others such as Spain and Australia are battling new outbreaks.
Stocks, euro rally on EU's massive recovery fund. World shares rallied to their highest since February and the euro hit its strongest in 18 months on Tuesday after European Union leaders agreed on a landmark stimulus package to revive regional economies ravaged by the coronavirus.
The agreement after five days of haggling drove down the risk premium on European assets and pushed gold to its highest in almost nine years. Bullion got an extra boost from a weaker dollar and expectations of more U.S. stimulus from Washington.
The willingness to raise a 750 billion-euro ($857 billion) fund in capital markets on behalf of all 27 EU states was an unprecedented act of solidarity in almost seven decades of European integration.
EU summit Chairman Charles Michel presented the final plan as a “pivotal” moment to dispel doubts about the bloc’s future.
The risk of a European break-up receded and the fund should support regional growth over the medium term, Esty Dwek, head of global market strategy at Natixis Investment Managers, told investors.
Germany’s DAX index entered positive territory for the year before paring gains to end up 0.96%. The euro rose 0.68% to $1.1522 after touching $1.1539, its highest since early January 2019. The single currency has gained more than 6% in the past three months.
Today Wednesday Oil eases from four month high on signs of swelling stockpiles.
Oil in New York eased from a four-month high on signs of a surprise gain in U.S. crude stockpiles, raising fresh concerns about supply as many regions struggled to get the pandemic under control.
The American Petroleum Institute reported crude inventories rose by 7.54 million barrels last week, according to people familiar with the figures, which would be the biggest increase since May if confirmed by government data on Wednesday. Meanwhile, President Donald Trump warned that the coronavirus outbreak in the U.S. will probably worsen before improving.
Oil Future close 21th July, 2020
Brent crude: $ 44.32 (+1.04) /brl FM delivery Sep
Light crude (WTI): $ 41.92 (+1.11) /brl FM delivery Sep
Gasoil ARA; $ 386.75 (+16.25) /mton FM delivery Aug
NY Harbor Ulsd: $ 394.06 (+13.70) /mton FM delivery Aug
Oil Futures trading at GMT 05.13; Brent: $-0.33, WTI: $-0.37. At present the tendency is downward, a rebound on yesterday’s relatively big oil price increase.
Expect bunker prices to increase based on Oil Future close last night. Fuel Oil up 6-8 usd/mton, MGO up 16 usd/mton, NY Harbor Ulsd up 14 usd/mton,