MABUX: Bunker market this morning, Aug 27

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 irregular changes on August 26:

380 HSFO: USD/MT 313.27 (+2.42)
VLSFO: USD/MT 366.00 (+3.00)
MGO: USD/MT 442.98 (-1.60)

Meantime, world oil indexes also demonstrated multidirectional changes on Aug.26 pressured by worries about the demand outlook during the coronavirus pandemic but buoyed as U.S. producers shut output in the Gulf of Mexico ahead of Hurricane Laura.

Brent for October settlement decreased by $0.22 to $45.64 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October rose by $0.14 to $43.49 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.15 to WTI. Gasoil for September delivery lost $7.50.

Today morning oil indexes are mixed.

Renewed worries over the pandemic, which has squeezed demand and sent prices to record lows in April, dampened market sentiment after reports this week of patients being re-infected, raising concerns about future immunity. The continued rise in the number of COVID-19 cases in Europe and Asia remains a concern for the market, despite several European nations saying they won't reinstate lockdowns.

The U.S. energy industry is preparing for Hurricane Laura, forecast to become a Category 4 hurricane with heavy rains and catastrophic, 209 km/h winds that will drive ocean waters up to 48 km inland. Nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15% of U.S. processing, were shutting down. Oil producers on Aug.25 had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production. A half a million people in the two states fled the storm, clogging highways out of the area.

Ahead of the storm, crude exports last week rose by the most since February 2019 to nearly 3.4 million barrels per day, according to U.S. Energy Information. Meanwhile, U.S. crude inventories fell by 4.7 million barrels last week, compared with expectations for a drop of 3.7 million barrels. Oil inventories stored at Cushing, Oklahoma, fell 279,000 barrels last week. Gasoline inventory dropped by 4.6 million barrels.

U.S. crude oil exports to China grew by 139 percent on the year in July thanks to bargain hunting among Chinese buyers, making the U.S. the fifth-largest supplier of oil to the critical Chinese market. The United States exported a daily average of over 866,000 barrels daily, based on a conversion factor of 7.33 barrels per 1 metric ton of crude. This increase boosted the total U.S. imports to China over the first seven months of the year by 31.5 percent on the respective period of 2019 to 4.8 million tons, or a monthly average of some 5 million barrels.

U.S. oil exports to China are likely to see a further boost. Chinese state energy companies had chartered tankers that can carry as much as 37 million barrels of crude for September shipments. This would be a record-high for China, despite the latest escalation between the two, and in accordance with its obligations under the trade deal closed last year.

We expect bunker prices may demonstrate irregular changes today: plus/minus 1-3 USD for IFO and 4-7 USD down for MGO.