MABUX: Bunker Market this morning, Nov 25
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
Oil rose about 4% on Tuesday to touch highs not seen since March as a third promising coronavirus vaccine raised hope for fuel- demand recovery and U.S. President-elect Joe Biden began his transition to the White House.
Brent crude settled at $47.86 a barrel, gaining $1.80, or 3.9%. U.S. West Texas Intermediate crude settled at $44.91 a barrel, rising $1.85 or 4.3%. Both benchmarks ended at their highest close since March 5.
AstraZeneca on Monday said its COVID-19 vaccine was 70% effective in trials and could be up to 90% effective, giving the fight against the pandemic another potential vaccine after positive results from Pfizer-BioNTech and Moderna.
However, the vaccine will not be readily available for several months, meaning people will likely restrict travel and other activities through next year to try to slow the spread of the disease.
“The petroleum complex is the vaccine trade,” said John Kilduff, partner at Again Capital in New York. “Until we can see the other side of the pandemic, the market is going to be mired in slack demand that is going to keep the overhang extensive.”
The coronavirus pandemic, coupled with the collapse of an OPEC-led output pact, sent prices crashing in March.
After the collapse of that output pact led to a brief Saudi Arabia-Russia price war, the Organization of the Petroleum Exporting Countries and allies agreed a new deal on record production cuts to support prices.
The group known as OPEC+ is expected to roll over those cuts into 2021 after meeting Nov. 30 to Dec. 1, following technical talks this week.
Oil prices pared gains slightly in post-settlement trade after the American Petroleum Institute, an industry group, reported U.S. crude inventories rose by 3.8 million barrels in the week to Nov. 20 to about 490 million barrels, compared with analysts’ expectations in a Reuters poll for a build of 127,000 barrels.
Official U.S. government crude stocks data will be released today Wednesday.
Oil rose for a fourth straight day on Wednesday, shrugging off an industry report showing a higher-than-unexpected rise in U.S. crude stockpiles and extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.
Brent Crude was up 54 cents, or 1.1%, at $48.40 a barrel by 0247 GMT, having risen almost 4% in the previous session. West Texas Intermediate crude gained 47 cents, or 1.1%, to $45.38 a barrel, after rising more than 4% on Tuesday.
Both contracts are at their highest since early March and have rallied nearly 10% in the last four days.
“The broader market is in de-risk mode as we now have three effective vaccines that can combat the virus,” said Kevin Solomon, energy economic analyst at StoneX.
However, any viable vaccine is not likely to be ready for mass use in the next few months, meaning lockdowns and travel restrictions will be in place into next year.
That makes it likely that OPEC+, which groups the Organization of the Petroleum Export Countries (OPEC) and allies including Russia, will continue production cuts into 2021 after a meeting set to start on Nov. 30 following technical talks this week.
OPEC+ producers have been withholding supplies to support prices after pandemic lockdowns earlier this year caused an evaporation in demand.
They are currently due to increase production by 2 million barrels per day -- about 2% of global demand before the pandemic -- from January.
Oil Future close 24th November,
Brent crude: $ 47.86 (+1.80) /brl FM delivery Jan (FM=Front Month)
Light crude (WTI): $ 44.91 (+1.85) /brl FM delivery Jan
Gasoil ARA; $ 388.75 (+18.50) /mton FM delivery Dec
NY Harbor Ulsd: $ 418.54 (+15.09) /mton FM delivery Dec
Oil Futures trading at GMT 07.00; Brent: $+0.38 WTI: $+0.30. – Tendency upward.
Fuel oil prices are expected to increase in big numbers today like plus 12-14 USD/MTON. (Fuel Oil, means 380 HS and VLSFO together), as well as MGO – 18 USD/MTON and for NY Harbor ULSD an increase of 15 usd/mton today.
All prices are based on Oil Future close yesterday evening Tuesday.