2020 September 7 09:02

MABUX: Bunker market this morning, Sep 07

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) fell slightly on September 04:

380 HSFO: USD/MT 307.01 (-2.80)
VLSFO: USD/MT 353.00 (-5.00)
MGO: USD/MT 427.70 (-7.03)

Meantime, world oil indexes changed irregular on Sep.04 as concern around a slow economic recovery from the COVID-19 pandemic added to worries about weak oil demand.

Brent for November settlement fell by $1.41 to $42.66 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery decreased by $1.60 to $39.77 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.89 to WTI. Gasoil for September delivery gained $1.00 – $335.50.

This morning, global oil indexes continue slight downward movement.

Prices were pressured by a report showing U.S. job growth slowed further in August as financial assistance from the government ran out. Nonfarm payrolls increased by 1.37 million jobs last month, though employment remained 11.5 million below its pre-pandemic level and the jobless rate was 4.9 percentage points higher than in February. The unemployment rate fell to 8.4% last month, compared to a forecasted 9.8%.

The downward evolution can likely be attributed to the strong dollar, after earlier reports that the U.S. unemployment rate dropped to 8.4%--as well as reports of faltering domestic gasoline demand in the United States.  A strong dollar makes U.S. oil more costly for other countries to purchase, and therefore typically has an inverse relationship with crude.

The United States has added 6 additional entities to its sanctions list for actions that it said violated current sanctions on Iran that seek to limit its oil trade. The entities include companies based not only in Iran, but in the UAE and China as well. Petrochemicals are a huge revenue source for Iran, where petrochemical investments reached $10 billion since March. Additionally, Iran has plans to launch another 17 petrochemical projects by the end of its year that will be capable of producing 100 million tons annually. The revenue from those additional projects could reach $25 billion.

Rosneft, said that it does not ship petroleum products to North Korea and does not do any business in the country. Rosneft also said that it considers the publishing of information about alleged involvement in supplies of oil products to North Korea as “a provocation,” and will go to court to protect its business reputation. Meantime, according to Yonhap news agency, the Russian oil products supplied to North Korea were produced by the state energy giants Rosneft and Gazprom. As per Yonhap, North Korea imported US$26 million worth of fuel products from Rosneft between 2018 and 2019 and about US$100,000 from Gazprom in 2018.

A report from the International Council on Clean Transportation (ICCT) said, the International Maritime Organization’s (IMO) proposed Arctic heavy fuel oil (HFO) ban contains so many waivers and exemptions that 84% of HFO use would still be allowed to continue until 2029. The IMO is scheduled to finalise the scope of the Arctic HFO ban in November. The ban would start to take effect in July 2024, but waivers and exemptions included in the draft text would allow some vessels to continue using and carrying HFO until July 2029. According to the ICCT’s analysis, under the IMO’s current proposal, 84% of HFO consumptions would be permitted until 2029, 70% of fuel oil carriage, and black carbon emissions would be at 95% of current levels. The report also flags up that HFO use in the Arctic is still on the rise – growing 75% between 2015 and 2019.

As per Integr8 Fuels, over the course of a year the percentage of straight run-based component in very low sulphur fuel oils (VLSFO) has dropped from 44% to 17%, while the distillate blend element has increased from a small percentage to 30%. There was also increase in the vacuum gasoil (VGO) component from 9% to 35% and, conversely, a decline in the cracked material component from 23% last July to 7% in July 2020. VLSFO’s some fuel degradation is possibly occurring between terminal storage and delivery, but there are the length of the fuel supply chain and storage times as other factors which could be contributing to perceived VLSFO stability problems.

The number of oil rigs in the United States rose by 1 to 181. The total number of active oil and gas rigs increased for the week by 2, with oil rigs rising by 1 and gas rigs holding steady. The EIA’s estimate for oil production in the United States dropped off considerably for the week ending August 28—the last week for which there is data, to 9.7 million barrels of oil per day. Oil production in the United States is now 3.4 million bpd less than its all-time high reached earlier this year. It is the lowest production level since January 2018.

We expect IFO bunker prices may fall by 7-10 USD while MGO prices may change irregular in a range of plus-minus 1-4 USD.