MABUX: Bunker market this morning, Dec. 2
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 slight irregular changes on Dec.01:
380 HSFO - USD/MT - 327.13 (+0.15)
VLSFO - USD/MT – 395.00 (+1.00)
MGO - USD/MT – 461.38 (-0.98)
Meantime, world oil indexes declined on Dec.01 as OPEC+ failed to reach an agreement regarding production cuts in 2021, with the three most influential members all disagreeing on how to proceed.
Brent for February settlement decreased by $0.17 to $47.42 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January fell by $0.79 to $44.55 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.87 to WTI. Gasoil for December delivery lost $0.75.
Today oil indexes continue to slide down hit by a surprise build in oil inventories in the United States and as OPEC+ delayed a formal meeting to decide whether to increase output in January.
The market was waiting for the decision of the OPEC+ to freeze output at its current level for at least another several months, rather than raise it by 1.9 million barrels a day, as had been foreseen when the group last met. However, the United Arab Emirates, reportedly supported by non-OPEC member Russia, had floated the idea of raising production by 500,000 barrels a day from January 1.
The failure to agree on an output level for OPEC as a group meant that it pushed back until Thursday a final decision in concert with Russia and other non-OPEC members. Additional supply would undermine a recent rally which saw prices soar about 27% in November, and some nations are concerned about lower prices as demand remains weak and COVID-19 infections soar. However, the United Arab Emirates (UAE) said this week that even though it could support a rollover, it would struggle to continue with the same deep output reductions into 2021. Meanwhile non-OPEC+ member Norway's oil output curbs, in place since June, are set to end on Dec. 31, which could further dent prices.
U.S. crude inventories rose by 4.1 million barrels last week, according to the American Petroleum Institute (API), after a build of 3.8 million barrels the previous week. Gasoline and distillates inventories rose by 3.4 million and 334,000 barrels. The build comes a day ahead of the official government report expected to show weekly U.S. crude supplies increased by about 2.4 million barrels last week.
Global demand for oil is running about 5 million to 6 million barrels per day (bpd) below pre-coronavirus crisis levels, according to Gunvor trading house. It is also said that the market would not recover to 2019 levels for at least a year and OPEC with its allies were likely to prolong existing production cuts into the first quarter of 2021. Demand plunged by almost a third and crude prices crashed in April as 4 billion people were placed under some form of lockdown to contain the spread of the novel coronavirus. A recovery in fuel consumption since June has stalled as major European states lock down to combat a second wave of COVID-19 infections. The vaccine will not change the realities on the ground for the next 5-6 months.
We expect bunker prices may demonstrate slight downward changes today: 1-3 USD down for IFO and 1-3 USD down for MGO.