MABUX: Bunker market this morning, Aug 12

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) rose slightly on August 11:

380 HSFO: USD/MT 306.39 (+2.69)
VLSFO: USD/MT 364.00 (+3.00)
MGO: USD/MT 443.76 (+2.53)

Meantime, world oil indexes changed irregular on Aug.11 as hopes dimmed for a swift stimulus package to relieve the U.S. economy as coronavirus cases increased globally.

Brent for October settlement decreased by $0.49 to $44.50 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September delivery fell by $0.33 to $41.61 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.89 to WTI. Gasoil for August delivery gained $8.25 – $376.00.

This morning, global oil indexes do not have any firm trend so far.

Three versions of stimulus disbursing aid of more than $3 trillion to U.S. businesses and individuals have been passed by Congress thus far since the Covid-19 pandemic brought the U.S. economy down in March, triggering a 5% GDP decline in the first quarter and a near 33% slump in the second. A mulled fourth version of stimulus will likely add another $2 trillion to U.S. spending, weighing further on a battered dollar which should be supportive to commodities. However, the U.S. Senate’s top Republican and Democrat criticized each others’ approach to coronavirus aid on Aug.11, with no word on when talks on a new package might resume.

President Vladimir Putin claimed on Aug.11 Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval has concerned some experts as the vaccine still must complete final trials.

OPEC+ production discipline slipped in July, as Gulf members led by Saudi Arabia ended their voluntary extra output cuts, while some countries that have struggled to adhere to their quotas continued to pump above their caps. Now Quota compliance by the 22-country alliance fell to 96% for the month, from 106% in July, with its collective production increasing by 1.10 million bpd. In particular, Iraq, Nigeria, Angola and Kazakhstan have come under intense scrutiny from their OPEC+ counterparts for their excess output. Iraq has said it will cut an extra 400,000 b/d below its quota in August and September, after missing its target yet again in July, while Angola and Kazakhstan significantly improved their performance in the month. Nigeria, meanwhile, maintains that some of its production should be categorized as condensate, which is not subject to the quotas.

The focus of Russia’s hydrocarbons-related power is now on its Arctic sector oil and gas reserves. These comprise over 35,700 billion cubic metres of natural gas and over 2,300 million metric tons of oil and condensate, principally located in the Yamal and Gydan peninsulas. It is expected, that the next 10-15 years will witness a dramatic expansion in the extraction of these Arctic resources, and a build-out of the Northern Sea Route (NSR) as the main transport route to monetise these resources in the global hydrocarbons markets. Last week the announcement of a joint venture (JV) was made between Russia’s third biggest oil company Gazprom Neft and Anglo-Dutch super-major, Royal Dutch Shell (Shell). The JV will focus on the exploration and development of oil and gas resources along the Gydan peninsula area.

Libya’s Waha oil fields have had work carried out on them to maintain the production and service facilities after they were offline for more than seven months due to an oil blockade. The Waha oil fields in the Sirte Basin make up about a third of Libyan crude oil production, with the capacity to pump around 350,000 bpd. The repairs at Waha were being carried out to reduce the risk of the sudden stoppages at the fields which were caused due to the force majeure, which is in place at Libya’s key eastern oil terminals.

The latest research has found that the average price for a kilo of hydrogen produced through electrolysis using solar or wind power will fall by about 50 percent between 2020 and 2050 in the United States and Europe. The results are certainly encouraging for companies seeking to make hydrogen the next dominant fuel. The EU has stated that hydrogen will have a leading part to play in decarbonizing transport and manufacturing. It has plans to build at least 40 GW of electrolysis capacity by 2030, with 6 GW of these to be up and running by 2024.

The American Petroleum Institute (API) reported on Aug.11 a draw in crude oil inventories of 4.401 million barrels for the week ending August 7. Forecasts had predicted a modest inventory draw of 2.875-million barrels. Oil production in the United States now appears to be leveling off after falling from 13.1 million bpd on March 13 to 11.0 million bpd on July 31.

We expect IFO bunker prices will not have any drastic changes today: plus-minus 1-2 USD variation. MGO prices may gain 2-8 USD during the day.