MABUX: Bunker market this morning, Dec 09
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 in the main world hubs) changed slightly on December 08:
380 HSFO: USD/MT 328.94 (-0.05)
VLSFO: USD/MT 400.00 (0.00)
MGO: USD/MT 470.23 (+1.93)
Correlation of the Market Bunker Prices (MBP) Index vs the MABUX Digital Bunker Prices (DBP) Index in four largest hubs showed on Dec.08 that in Rotterdam MBP for 380 HSFO and MGO LS were below the DBP index (i.e. fuel was undervalued) by 7 USD and 18 USD, respectively. Meantime, the VLSFO in Rotterdam was still overvalued by 9 USD. In Singapore, there was registered a 100% correlation between MBP and DBP indices for 380 HSFO and VLSFO, while MGO LS was still undervalued. In Fujairah and Houston, 380 HSFO and VLSFO remained overvalued. MGO LS showed undervaluation in Fujairah (minus 18 USD) but overvaluation in Houston (plus 9 USD).
World oil indexes changed insignificant and irregular on Dec.08 after coronavirus cases surged in the United States and Europe, counteracting optimism that arose over vaccine advancements.
Brent for February settlement rose by $0.05 to $48.84 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery decreased by $0.16 to $45.60 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.24 to WTI. Gasoil for December delivery gained $0.50 – $402.00 .
Today morning oil indexes demonstrate slight downward trend.
A sharp rise in coronavirus cases globally has led to a string of renewed lockdowns, including strict measures in California, Germany and South Korea. France may have to delay unwinding some lockdown restrictions next week, after signs the downward trend in new cases had flattened after shops were allowed to reopen late last month.
The American Petroleum Institute (API) reported on Dec.08 a build in crude oil inventories of 1.141 million barrels for the week ending December 4. Forecasts had predicted an inventory draw of 1.514 million barrels for the week. Besides, the API reported a large build in gasoline inventories of 6.442 million barrels of gasoline for the week ending December 4—compared to the previous week's 3.402-million-barrel build. U.S. oil production was up 100,000 bpd for the week ending November 27, at 11.1 million bpd—2.0 million bpd lower than the all-time high of 13.1 million bpd reached in March.
The next OPEC+ group meeting on production policy is expected to be set for the first trading day of 2021, January 4. The group managed to avoid a no-deal outcome at its last week meetings, which went on for days amid disagreements over how the OPEC cartel and its Russia-led non-OPEC partners would act next year with the pandemic still depressing fuel demand in the world. The original plan for a 2-million-bpd increase of OPEC+ production as of January was watered down to a 500,000-bpd rise for January in a compromise agreement, largely seen as a positive outcome that avoided a break-up of the OPEC+ pact or even of OPEC.
Iran is preparing to start expanding its crude oil exports ahead of Joe Biden's inauguration in January in a clear sign it expects better bilateral relations with the U.S. during the next administration. The U.S. president-elect said although, he would only lift the sanctions imposed on Iran by President Trump if Iran returns to "strict compliance with the nuclear deal". In response, Iran said Washington had its own "commitments". It is expected Iran will be ready to return to pre-sanction production and exports within three months.
Iraq said it is committed to all OPEC+ production cut agreements that help contain the volatility in oil prices because OPEC’s second largest oil producer seeks higher prices for its crude exports. Iraq has a production quota of 3.804 million bpd and had agreed to implement “compensation cuts” of 203,000 bpd below that in September and 165,000 bpd for October to December for its excess production from May to August. Iraq plans to base its 2021 oil budget on a price of $42/b. The country’s parliament is expected to start debating this month the budget draft bill.
Japan said it will introduce ammonia into the fuel mix for thermal power generation as well as for shipping from the late 2020s as part of its efforts to achieve carbon neutrality in 2050. For introduction of fuel ammonia, Japan should consider ways to lower its production cost, which is “slightly expensive”, and be competitive against all other fuel and energy sources, including coal, gas, and renewables for power generation. To introduce ammonia for thermal power and as a shipping fuel in the late 2020s, Japan will also consider developing its supply chain spanning procurement, production, transportation, storage, utilization, and finance.
We do not expect any drastic changes in bunker prices today with possible fluctuations of plus-minus 1-3 USD.
