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) continued to rise on November 12:
380 HSFO: USD/MT 312.81 (+4.87)
VLSFO: USD/MT 370.00 (+2.00)
MGO: USD/MT 435.14 (+2.64)
Meantime, world oil indexes decreased on Nov.12 amid mixed inventory numbers and a new explosion of coronavirus cases in the United States.
Brent for January settlement decreased by $0.27 to $43.53 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December fell by $0.33 to $41.12 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.41 to WTI. Gasoil for December delivery lost $4.75.
Today oil indexes continue to decline after a gloomy forecast from the International Energy Agency weighed on the demand outlook.
According to the U.S. Energy Information Administration, crude oil inventories across the country rose 4.3 million barrels last week, versus expectations for a draw of 913,000 barrels. Crude stored at the Cushing, Oklahoma delivery point for contracted barrels of WTI declined 518,000 barrels last week, against expectations for a draw of 1.6 million barrels. But offsetting the crude numbers were fuel statistics which indicated better demand. Gasoline stockpiles fell by 2 million barrels above forecast. Diesel-led distillate inventories slid 3.5 million barrels more than expected.
The trend divergence between crude and fuels was probably due to industry disruptions caused by the end-October Storm Zeta. A record of nearly 30 hurricanes has occurred in the U.S. Atlantic region this year, affecting crude production in states like Louisiana and the broader Gulf Coast of Mexico. Each of these storms resulted in near total shutdowns of crude production that invariably sprung back quickly, forcing estimators to sharply pare crude inventory/fuel demand estimates at first, only to ratchet them much higher later.
Fears over demand have capped a week of gains for oil as a second wave of COVID-19 cases builds across the U.S. and Europe, threatening to reduce economic activity even further. U.S. coronavirus cases hit a new daily record high on Nov.12, with 140,543 reported, marking the ninth straight day where they stood at above 100,000. According to Johns Hopkins University, some 10.4 million Americans have contracted the Covid-19 so far and nearly 242,000 have died from complications caused by the virus.
The EIA said in its latest Short-Term Energy Outlook (STEO), that this year, WTI Crude prices are expected to average $38.24 per barrel. Brent prices will likely stay near $40 a barrel through the end of 2020. Both benchmarks are down slightly compared to its estimates in the October STEO. EIA sees the record high global cases of COVID-19 and the return of Libyan oil sooner than expected as the main headwinds to oil prices now. The administration expects global inventories to continue falling in the coming months, but “high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices.
In its monthly Oil Market Report, the International Energy Agency (IEA) said that permanent shutdowns of refinery capacity had reached 1.7 million barrels per day (bpd). But another more than 20 million bpd crude oil distillation capacity now sits idle, pointed, that there remains significant structural overcapacity.
The good news on the vaccine front from Pfizer Inc and BioNTech at the start of the week supported oil prices. At the same time, there’s still a lot of uncertainty about how quickly it could be rolled out. Three of the world’s top central bankers warned that it wouldn’t be enough to put an end to the economic challenges created by the pandemic. The IEA also cautioned the breakthrough won’t quickly revive energy.
Responding to the global conditions, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman has said that OPEC+ is looking into maintaining its current supply cuts well into 2021, given agreement between its members. Algeria’s energy minister also said, that OPEC+ could extend the group’s current oil production cuts into 2021 or deepen them further if market conditions require.
We expect bunker prices may slight down today: 1-3 USD down for IFO and 2-4 USD down for MGO.