MABUX: Bunker market this morning, Aug 17

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 demonstrated slight downward changes on August 14:

380 HSFO: USD/MT 308.49 (-0.44)
VLSFO: USD/MT 366.00 (-1.00)
MGO: USD/MT 446.54 (-0.38)

Meantime, world oil indexes declined on Aug. 14 after disappointing retail sales data raised doubts about the strength of the U.S. economic recovery.

Brent for October settlement decreased by $0.16 to $44.80 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September fell by $0.23 to $42.01 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.79 to WTI. Gasoil for September delivery lost $2.00.

Today morning oil indexes increase following news that China plans to increase imports of U.S. crude in the coming months. However, new COVID-19 outbreaks capped gains.

Oil indexes had hit a five-month high on Aug.13 after the U.S. Energy Information Administration confirmed a bigger-than-expected fall in inventories of crude, gasoline and other distillates last week. That was the third consecutive week of stock declines, with inventories declining by almost 22.5 million barrels over that, despite a new wave of the Covid-19 virus having impacted business performance in most U.S. states since July.

And while a new wave of the pandemic across the world generates enough concern about the immediate demand for energy, the market can expect more support in the coming week that can come from OPEC+. The alliance will meet on Aug.19 to review the market amid efforts to roll back some two million barrels from production cuts of around 9.6 million barrels per day agreed to in May.

Oil prices gained some support from news, that, tankers have been tentatively booked by Chinese state-owned oil firms to carry at least 20 million barrels of U.S. crude for August and September. There has also been a recent spike in purchases by China’s state-owned oil and gas firm PetroChina and its largest refiner Sinopec Corp. China is already expected to import record 32 million barrels of U.S. oil in August. This has eased worries that China, a top U.S. crude buyer, will not meet its purchase commitments under phase one of the trade deal between the two countries.

However, a worsening COVID-19 situation in multiple places around the world has put the brakes on further gains. In the U.S. deaths surpassed 170,000, according to Johns Hopkins University data. Singapore has also recorded 86 new cases on Aug.16. New Zealand entered new lockdowns after recording several dozen cases of Covid-19 despite going 100 days without any new community outbreaks.

Baker Hughes reported on Aug.14, that the number of combined oil and gas rig count in the US fell yet again this week by 3, to 244, as the pandemic continues to batter the oil and gas industry. Total oil and gas rigs in the United States are now down by 691 compared to this time last year. The number of oil rigs slipped for the week by 4 rigs for the second week in a row, bringing the total to 172, compared to the 770 active oil rigs this time last year. As the rig count declines, U.S. crude oil production is expected to fall by 990,000 barrels per day (bpd) this year to 11.26 million bpd, the U.S. Energy Information Administration (EIA) said on Aug.13, a steeper drop than its forecast last month for a 600,000-bpd fall.

The United States said on Aug.14 it had confiscated four Iranian fuel shipments that had been bound for Venezuela, disrupting a key supply line for both Tehran and Caracas as they defied U.S. sanctions. U.S. President Donald Trump said Iran should not be sending cargoes to Venezuela and added that the seized shipments were bound for Houston, Texas, and suggested they may have already arrived. The U.S. Justice Department said the seized cargo was now in U.S. custody "with the assistance of foreign partners," adding that the amount confiscated from four tankers was about 1.116 million barrels of fuel, making it the largest-ever U.S. seizure of Iranian fuel. Venezuela had already paid for the fuel and hence Iran will not lose any revenue from the confiscation.

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