MABUX: Bunker market this morning, Aug 31

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 downward changes on Aug.28:

380 HSFO: USD/MT 312.83 (-2.67)
VLSFO: USD/MT 363.00 (-3.00)
MGO: USD/MT 441.33 (-2.99)

Meantime, world oil indexes demonstrated multidirectional changes on Aug.28.

Brent for October settlement decreased by $0.04 to $45.05 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October declined by $0.07 to $42.97 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.08 to WTI. Gasoil for September delivery added $3.00.

Today morning oil indexes rise as global stimulus measures underpin prices even as demand struggles to return to pre-COVID levels in a well supplied market.

Oil markets largely shrugged off the hurricane's impact on Aug.28 as energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm. At the same time, U.S. Gulf of Mexico crude oil output remained down 70%, or 1.29 million barrels per day as companies continued to return crews to offshore facilities that were evacuated ahead of Hurricane Laura. A total of 139 platforms or drilling rigs in the U.S. Gulf of Mexico were unmanned at midday on Sunday. Offshore Gulf of Mexico wells account for 17% of total U.S. crude oil production and 5% of total U.S. natural gas production.

The region’s offshore natural gas production remained down 50%, with 1.35 billion cubic feet per day shut in on Aug.28, as energy producers began to restore output that was halted ahead of Laura.

In addition to the well shut-ins, the storm prompted energy firms to suspend processing at six coastal refineries last week. Those six account for about 12% of U.S. oil processing capacity. Refineries without significant damage also began taking steps to restart operations.

According to Baker Hughes, the number of oil rigs in the United States fell by 3 to 180 last week, after rising the previous week for the first time since January. The total number of active oil and gas rigs held steady for the week, with gas rigs increasing by 3. Total oil and gas rigs in the United States are now down by 650 compared to this time last year. At the same time, higher oil and gas prices are also encouraging U.S. producers to resume drilling as the country's oil and gas rig count rose by three to 254 in August.

The EIA’s estimate for oil production in the United States stayed the same for the week ending August 21—the last week for which there is data, at 10.8 million barrels of oil per day. Oil production in the United States is now 2.3 million bpd less than its all-time high reached earlier this year.

A weak U.S. dollar has supported oil prices even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain excessive, although crude may face hurdles going forward.

China's crude imports in September are set to fall for the first time in five months as record volumes of crude are stored in and outside of the world's largest importer.

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