MABUX: Bunker market this morning, Sept 11

The Bunker Review was contributed by Marine Bunker Review (MABUX)

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) did not have firm trend and changed irregular on September 10:

380 HSFO: USD/MT 291.27 (+0.89)
VLSFO: USD/MT 32.00 (-2.00)
MGO: USD/MT 409.80 (+0.70)

Meantime, world oil indexes also changed irregular on Sep.10 after U.S. data showed a surprise build in crude stockpiles last week.

Brent for November settlement fell by $0.73 to $40.06 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery decreased by $0.75 to $37.30 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.76 to WTI. Gasoil for September delivery gained $5.50 – $322.75.

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

The slide in crude oil prices accelerated after the Energy Information Administration reported a crude oil inventory build of 2 million barrels for the week to September 4. A day earlier, the American Petroleum Institute added gloom to an already pessimistic market by reporting an inventory build of 2.97 million barrels for the same period. Forecasts had expected the EIA to report a moderate draw of a little over 1 million barrels.

As per Platts, OPEC’s 13 members produced in August 24.37 million bpd, a 4% rise from July, while its nine partners, including Russia, added 12.67 million bpd, a 6% increase. The higher volumes were not unexpected as the OPEC+ coalition’s record 9.7 million bpd production cut accord, implemented during the depths of the coronavirus crisis in May, had been scheduled to ease to 7.7 million bpd for the rest of the year starting in August. As such, the group achieved 97% compliance with its new quotas in the month. But the increased production is coming at a time when the rapid recovery of global oil demand appears to be stalling, amid fears of a growing second wave of COVID-19 infections.

Meanwhile, Russia’s central bank has warned that crude oil prices could slump to $25 in its risk scenario for monetary policy over the next three years. That scenario, which is the bank’s worst case for 2021 to 2023, also includes heightened geopolitical tensions, a second wave of coronavirus infections, and other economic shocks. Debt problems and trade tensions are also included in that scenario.

The U.S. Energy Information Administration raised its 2020 forecasts for West Texas Intermediate and Brent crude oil prices and U.S. crude-oil production. The EIA pegged its 2020 WTI oil price forecast at $38.99 a barrel, up 1.3% from its August forecast. It also lifted its Brent crude price forecast by 1.2% to $41.90 for 2020. The agency expects U.S. crude production of 11.38 million barrels a day this year, up 1.1% from the previous view. The EIA also lifted its forecast for natural-gas prices to $2.49 per million British thermal units, up 5.8% from the previous view.

Libya’s National Oil Corporation (NOC) said that a warship had been staying at the Ras Lanuf oil terminal for several days, and has demanded that the military activity at vital Libyan oil facilities cease. Libya’s oil terminals remain out of service, and the country has not exported oil since January. Currently, oil production in Libya is just 100,000 bpd—down from 1.2 million bpd at the start of the year, just before paramilitary formations affiliated with the Libyan National Army (LNA) occupied Libya's oil export terminals and oilfields.

Reports of rising oil and fuel inventories in floating storage pressured benchmarks as commodity traders chartered tankers to store fuel and crude offshore. A number of the vessels are newly-built and are due to store gasoil and diesel, for which unsold volumes are especially high after a modest recovery mid-summer. The news of rising floating storage is particularly worrisome because it means that onshore storage space is still full, despite a moderate increase in fuel demand after most lockdowns eased in May.

We expect IFO bunker prices may fall by 3-5 USD while MGO prices may change irregular in a range of plus-minus 3-6 USD.