MABUX: Bunker market this morning, Sept 30

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 upward changes on September 29:

380 HSFO: SD/MT 292.76 (+1.15)
VLSFO: USD/MT 346.00 (+2.00)
MGO: USD/MT 410.07 (+2.51)

Meantime, world oil indexes declined on Sep.29 as fears resurfaced once again about the trajectory of global demand amid prospects of a full winter of coronavirus-driven restrictions on economic activity.

Brent for November settlement decreased by $1.40 to $41.03 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November declined by $1.31 to $39.29 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.74 to WTI. Gasoil for October delivery lost $4.75.

Today morning oil indexes continue to fall amid oversupply fears, with U.S. refineries beginning to shed labor.

The main driver for fuel market is the poor economic forecasts for future consumption amid the COVID-19 pandemic and continued oversupply issues. The global death toll from the COVID-19 pandemic passed 1 million earlier in the week, and case numbers continue to rise, further threatening global economic recovery. To counter the fall in demand, OPEC is unlikely to increase oil production as planned from January next year.

U.S. oil stockpiles fell last week, but worries remain that oil demand will likely fade amid signs of increasing Covid-19 cases in the U.S. and abroad. Data from the American Petroleum Institute (API) on Sep.29 showed a draw of 831,000 barrels for the last week (it was expected a build of 1.4 million barrels), following the previous week’s build of 691,000 barrels. However, this was insufficient to hold back the fall in prices. Investors now await crude oil supply data from the U.S. Energy Information Administration (EIA), due later in the day.

In signs of a protracted oversupply problem, U.S. refineries are beginning to lay off workers. Marathon Petroleum Corp, the U.S.’ largest refiner, looking to widespread job cuts to help maintain their bottom line. Refineries globally are feeling the pressure of a hugely depressed global air travel industry, with many refineries attempting to blend their excess jet fuel into other products and some installations looking likely to face shutdown.

The uncertainty over U.S. presidential elections is also cause for concern, with President Donald Trump refusing to guarantee a peaceful transition of power should he be ousted. The first presidential election debate was earlier this morning and was highly combative.

Libya's Sarir oilfield, which was producing more than 300,000 barrels per day last year, restarted output after eastern forces lifted an eight-month blockade on energy facilities. That also pressures the oil indexes.

We expect bunker prices may demonstrate downward changes today: 6-8 USD down for IFO and 3-5 USD down for MGO.