MABUX: Bunker Market this morning, Nov 27
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
Oil slipped from seven-month highs on Thursday as signs of growing supplies helped to halt a rally driven by optimism that COVID-19 vaccines will revive fuel demand.
Brent futures had risen to nearly $50 a barrel this week after three major pharmaceutical companies announced progress on vaccines that could start to be rolled out before the end of the year.
But Brent was down 74 cents, or 1.5%, at $47.87 a barrel by 1650 GMT on Thursday, having dropped as much as $1. The contract gained about 1.6% in the previous session.
West Texas Intermediate (WTI) crude fell 66 cents, or 1.4%, to $45.05 after gaining 1.8% on Wednesday.
“Despite a number of strong fundamentals rallying the markets, especially vaccine development supporting oil, bearish concerns remain,” said Avtar Sandu, senior commodities manager at Phillip Futures.
Lockdowns as the COVID-19 pandemic worsens, the rising number of rigs employed in the United States and increased production from Libya are risk factors for bulls, he said.
U.S. President-elect Joe Biden has urged people to forgo big family gatherings, wear protective masks and maintain social distancing for the Thanksgiving holiday. But Americans are defying pleas from officials to stay at home.
The United States has recorded 2.3 million new infections in the past two weeks.
While fuel demand has fallen with the second round of lockdowns, non-compliance has translated into a smaller than expected drop in European demand, Rystad Energy said.
“The restrictions currently imposed in Europe – had they been adhered to widely – should have resulted in a 20% to 30% drop in activity. Instead, as our real-time measurements show, we observe a drop of only around 12%,” Rystad said in a note.
Investors also await next week’s OPEC meeting.
Oil prices were mixed on Friday in quiet trade due to the U.S. Thanksgiving holiday, with West Texas Intermediate (WTI) dropping more than 1% amid concerns about oversupply and doubts about a vaccine to end the coronavirus pandemic.
WTI was down by 69 cents, or 1.5%, at $45.02 by 0104 GMT. U.S. crude prices did not settle on Thursday due to the holiday. Brent crude was up by 9 cents at $47.89, having fallen 1.7% overnight.
Both benchmarks have risen about 6% this week, after AstraZeneca earlier announced that its COVID-19 vaccine could be up to 90% effective, adding to successful trial results of two others under development in the fight to end the worst pandemic in a century.
But questions have been raised over the so-called “vaccine for the world” as several scientists have sounded doubts over how robust the results of the trials were.
“It seems some profit taking is finally kicking in ... as we ease into the end of the week,” Craig Erlam, senior market analyst at OANDA.
Still, “with WTI holding above $45 and Brent having touched $49, it seems crude is through the worst of its post-summer troubles,” he said.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia that make up the OPEC+ grouping are leaning towards delaying next year’s planned increase in oil output, three sources close to OPEC+ said.
OPEC+ was planning to raise output by 2 million barrels per day (bpd) in January - about 2% of global consumption - as it moves to ease this year’s record supply cuts.
But rising Libyan output is contributing to concerns about oversupply in the market as many people are ignoring lockdown advice and travelling.
Nearly 6 million Americans took air trips from Friday to Wednesday in advance of the Thanksgiving break as they ignored advice from the Centers for Disease Control to stay home, the U.S. Transportation Security Administration said.
Oil Future close 26th November:
Brent crude: $ 47.80 (-0.81) /brl FM delivery Jan (FM=Front Month)
Light crude (WTI): $ 44.93 (-0.78) /brl FM delivery Jan
Gasoil ARA; $ 389.00 (-0.25) /mton FM delivery Dec
NY Harbor Ulsd: $ 420.56 (-6.32) /mton FM delivery Dec
Oil Futures trading at GMT 07.12; Brent: $-0.08, WTI: $-0.06. – Irregular.
We expect fuel oil prices to drop 5-6 USD/MTON (Fuel Oil, means 380 HS and VLSFO together), while MGO price to remain unchanged and NY Harbor ULSD to decline 6 USD/MTON.
All prices are based on Oil Future close yesterday evening Thursday.