MABUX: Bunker market this morning, Sept 16

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 September 15:

380 HSFO: USD/MT 287.95 (-0.60)
VLSFO: USD/MT 332.00 (+1.00)
MGO: USD/MT 405.89 (-0.78)

Meantime, world oil indexes increased on Sep.15 on production shutdowns ahead of the hurricane barreling toward the U.S. Gulf Coast of Mexico.

Brent for November settlement increased by $0.92 to $40.53 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October rose by $1.02 to $37.33 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.25 to WTI. Gasoil for October delivery added $0.25.

Today morning oil indexes continue to rise, as a hurricane disrupted U.S. offshore oil and gas production and amid a big drop in U.S. crude stockpiles.

More than 25% of U.S. offshore oil and gas output was shut and export ports were closed on Sep.15 as Hurricane Sally sat just off the U.S. Gulf Coast. That is likely to help reduce stockpiles although refineries were also shut down, cutting demand for oil.

According to the American Petroleum Institute (API), U.S. crude oil inventories fell by 9.5 million barrels last week, although gasoline inventories increased. It was expected the increase of oil stocks by 1.3 million barrels. Official data on U.S. stockpiles is due out later on today and often conflicts with the industry figures. The forecasts indicating that the U.S. government will likely report a second-straight week of stockpile builds for the last week means that any rebound in oil indexes could be limited.

Oil production in the United States rose during the first week of September from the week prior, but it is still down significantly from a high of 13.1 million bpd on Mar.13. U.S. oil production currently sits at 10.0 million bpd, according to the Energy Information Administration—3.1 million bpd under March highs.

At the same time, the International Energy Agency (IEA) said on Sep.14 that it expects global oil demand growth to fall by 8.4 million bpd year-on-year to 91.7 million bpd. That is a deeper contraction than the 8.1 million bpd decline previously estimated. The main driver is a resurgence of Covid-19 cases in many countries that led to local lockdown measures, continued teleworking and the weak aviation sector.

According to data, global oil supply rose by 1.1 million bpd in August as OPEC+ cuts eased, but was down 9.3 million bpd on a year ago. Following two months of gains, the recovery in countries outside the OPEC+ deal stalled in August. Production in the United States fell by 0.4 million bpd as Hurricane Laura forced precautionary shut-ins. Total non-OPEC supply is expected to drop by 2.6 million bpd in 2020.

The recovery in global refining throughput is expected to slow from August to October due to the impact of hurricane shutdowns in the US Gulf and seasonal maintenance elsewhere. Chinese and Indian refinery runs fell in July and Hurricane Laura cut short the US recovery.

The OPEC+ alliance of global oil producers said at its most recent meeting that it will not impose unilateral production cuts to try and boost falling crude prices.

We expect bunker prices may demonstrate upward changes today: 4-6 USD up for IFO and 1-3 USD up for MGO.