MABUX: Bunker market this morning, Sept 24

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 23:

380 HSFO: USD/MT 293.60 (+0.16)
VLSFO: USD/MT 339.00 (+1.00)
MGO: USD/MT 406.29 (-0.47)

Meantime, world oil indexes rose on Sep.23 after the Energy Information Administration reported an oil inventory draw.

Brent for November settlement increased by $0.05 to $41.77 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November rose by $0.13 to $39.93 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.84 to WTI. Gasoil for October delivery added $3.50.

Today morning oil indexes decline on concerns the economic recovery in the United States, the world's biggest oil consumer, is slowing as the coronavirus outbreak lingers and a resurgence in European cases led to new travel restrictions there.

According to government data, oil stockpiles declined last week, but less than expected - by 1.6 million barrels. It was expected a draw of 2.3 million barrels. Seven of the previous eight weeks had seen falling inventory. The data came a day after the American Petroleum reported a sizeable decline in gasoline stocks, coupled with a modest build in crude oil stocks. In gasoline, the EIA estimated an inventory draw of 4 million barrels for the week to September 18, compared with a decline of 400,000 barrels for the previous week. This also supported the prices. Crude stored at Cushing, Oklahoma, rose by 4,000 barrels.

Still, fuel demand in the U.S. remains subdued as the coronavirus pandemic limits travel. The four-week average of gasoline demand was 8.5 million barrels per day last week, the government data showed, down 9% from a year earlier. Moreover U.S. business activity slowed in September, U.S. Federal Reserve officials flagged concerns about a stalling recovery, and Britain and Germany imposed restrictions to stem new coronavirus infections.

The EIA also said the OPEC+ production cuts and curtailments in the United States are set to help global inventories to continue drawing down for the rest of the year and most of next year, resulting in a relatively balanced market by the end of 2021. The OPEC+ deal and the production drops elsewhere, most of all in North America, have brought global supply below the level of demand for the first time since the middle of 2019, the EIA estimated, noting that the supply deficit has helped bloated global inventories to decline since June.

At the same time, while some say that global inventories are declining and will continue to draw down through the rest of the year, others have flagged faltering demand recovery and resurging COVID-19 cases as reasons for being careful about the outlook on inventory drawdowns in the coming months.

On the supply side, the market remains wary of a resumption of exports from Libya, although it is unclear how quickly it can ramp up volumes. Libya's National Oil Corp (NOC) seeks to boost output to 260,000 bpd by next week. NOC reopened another port, the third to resume operation in less than a week, as a political truce takes hold in the OPEC member’s devastating civil war. The NOC allowed exports to resume days earlier from the Hariga and Brega terminals. The three ports had been shut down since January as part of a wider blockade. Es Sider and Ras Lanuf, the country’s largest and third-largest oil ports, remain closed, as does the Zawiya terminal, which ordinarily exports crude from the country’s biggest field, Sharara.

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