MABUX: Bunker market this morning, Oct 21

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) demonstrated slight downward changes on October 20:

380 HSFO: USD/MT 298.48 (-1.19)
VLSFO: USD/MT 351.00 (-2.00)
MGO: USD/MT 413.46 (-1.99)

Meantime, world oil indexes also demonstrated irregular changes on Oct.20 on hopes that the United States was nearing a stimulus deal, but the threat to demand from rising coronavirus cases worldwide and increased Libyan output kept prices from moving higher.

Brent for December settlement increased by $0.54 to $43.16 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December rose by $0.87 to $41.70 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.46 to WTI. Gasoil for November delivery lost $3.75.

Today oil indexes decline amid surprise build in U.S. crude supplies.

API a 584,000-barrel build in the week to Oct.16, against the forecast 1.9-million-barrel draw and the previous week’s draw of 5.422 million barrels. The market is now looking to data from the U.S. Energy Information Administration, due later in the day.

The market is also following negotiations between U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another U.S. coronavirus aid package. If the deal is made that would support oil indexes. At the same time, Pelosi said in an interview she was optimistic Democrats could reach a deal with the Trump administration and aid could go out by early next month.

The rebound in COVID-19 cases in Europe and North America that has sparked renewed lockdown measures is weighing on oil prices. There are over 40 million COVID-19 cases globally as of Oct. 20, according to Johns Hopkins University data. A second wave of cases in Europe and the U.S. has seen governments re-introduce restrictive measures.

Fuel demand concerns saw OPEC+ pledge to support the oil indexes during joint ministerial monitoring committee (JMMC) meeting. Despite the concerns, OPEC+ will press ahead with plans to pare production cuts to 5.7 million barrels per day (bpd) from January onwards, from the 7.7 million bpd cut in place through December. However, these plans to increase output from January could reportedly be reversed should the need arise. At the same time, Russian energy minister Alexander Novak warned on Oct.20 it was too early to discuss global oil production curbs beyond December 1.

Rising output from Libya, which is operating outside the OPEC+ pact, was adding to oversupply concerns. Libyan production is seeing a rapid increase, playing catch up after almost all the country’s output was shut down in January due to the outbreak of armed conflict. Sharara, the biggest oil field, is now reportedly at around 150,000 bpd, or half of its capacity, since it re-opened on Oct. 11. Another 70,000 bpd oilfield is expected to restart on Oct. 24.

We expect bunker prices may demonstrate multidirectional changes today: 3-5 USD up for IFO and 1-3 USD down for MGO.