MABUX: Bunker market this morning, Sept 22

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 September 21:

380 HSFO: USD/MT 295.58 (-1.06)
VLSFO: USD/MT 345.00 (-2.00)
MGO: USD/MT 413.01 (-4.84)

Meantime, world oil indexes also decreased on Sep.21 amid rising concerns that an increase in coronavirus cases in major markets could spur fresh lockdowns and hurt demand.

Brent for November settlement decreased by $1.71 to $41.44 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October fell by $1.80 to $39.31 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.13 to WTI. Gasoil for October delivery lost $18.00.

Today morning oil indexes rise as the latest tropical storm in the Gulf of Mexico lost strength, but worries about fuel demand still pressure the prices.

Texas refineries stayed open despite forecasts of heavy flooding, as Tropical Storm Beta decreased in power in the Gulf of Mexico, allaying concerns of an extended shutdown that began in the previous week with Hurricane Sally.

Market is worry about demand in places like the United Kingdom, where fresh restrictions are being imposed. British Prime Minister Boris Johnson was pondering a second national lockdown as the U.K. registered over 37,000 deaths from nearly 340,000 cases. Caseloads in Spain and France have also climbed. U.S. health officials are warning of a new wave in the coming winter.

The market will be watching out for the American Petroleum Institute's data on U.S. oil inventories due later today. U.S. crude oil and gasoline stockpiles likely fell last week, while inventories of distillates, including diesel, were seen climbing.

There are also worries that a peace pact in Libya could ultimately deliver another million barrels per day to a market already deemed oversupplied. The workers at the major Sharara field have restarted operations, after the National Oil Corporation announced a partial lifting of force majeure, and a Suezmax tanker is making its way to Libya’s Marsa El Hariga terminal. But it was unclear when and at what level production might resume amid a peace deal offered by renegade general Khalifa Haftar to the government in Tripoli.

The OPEC+ could be forced to respond to the return of Libyan oil with more output cuts from major producers in the Persian Gulf. It cited an internal planning document that foresaw Saudi Arabia, the United Arab Emirates and Iraq trimming their output by over 700,000 barrels a day to rebalance the market in that contingency.

In addition, Chinese refineries are reportedly cut their runs by 5% - 10% this year in the face of high product inventories and low export margins.

We expect bunker prices may demonstrate downward changes today: 7-10 USD down for IFO and 15-18 USD down for MGO.