2020 October 27 09:45
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
Oil Market close yesterday evening
Oil dropped yesterday 3% as virus infections, Libyan oil output rebound.
Oil prices fell more than 3% on Monday, extending last week’s losses as coronavirus cases continued to surge in the United States and Europe, while Libya’s rebound in crude production raised fears of oversupply.
The United States reported its highest number yet of new coronavirus infections in two days through Saturday, while in France new cases hit a record of more than 50,000 on Sunday. Italy and Spain imposed fresh restrictions to curb the virus.
“It’s a dark Monday in the oil market,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “We have long warned that a ‘second wave’ of strict coronavirus restriction measures could be re-imposed, and it’s now happening for real.”
Brent dropped $1.31, or 3.1%, to settle at $40.46 a barrel. U.S. West Texas Intermediate (WTI) fell $1.29, or 3.2%, to settle at $38.56 a barrel. Both contracts fell almost 2.5% last week.
Libya’s National Oil Corp (NOC) on Monday ended force majeure on the remaining facilities closed by an eight-month blockade of oil exports by eastern forces.
NOC said on Friday that Libyan production would reach 1 million barrels per day (bpd) in coming weeks, a quicker ramp-up than many analysts had predicted.
“The last thing the market needs right now is additional supply,” said Warren Patterson, ING’s head of commodities strategy.
OPEC’s secretary general said an oil market recovery may take longer than hoped as coronavirus inflections rise around the world.
OPEC+, the producer group and it allies including Russia, is set to increase output by 2 million bpd in January 2021 after a record production cut earlier this year.
“OPEC+ must not be careless and have to address the issue of the extra barrels appearing in the market, otherwise the days of relatively stable oil prices will be numbered,” said oil broker PVM’s Tamas Varga.
Meanwhile, the U.S. Gulf Coast energy sector prepared for another storm. Oil producers on Monday were halting offshore production in the Gulf of Mexico as the 27th named storm of the season strengthened and looked likely to threaten the United States as a hurricane.
Oil Maket today Tuesday morning
Oil steadies, but outlook gloomy as coronavirus cases, supply grow.
Oil prices eked out small gains on Tuesday after recent sharp losses, but sentiment remained subdued as a surge in global coronavirus cases hit prospects for crude demand while supply is rising.
Brent crude was up 19 cents, or 0.5%, at $40.65 a barrel by 0324 GMT. U.S. oil gained 15 cents, or 0.4%, at $38.71 a barrel. Both contracts fell more than 3% on Monday.
A wave of coronavirus infections sweeping across the United States, Russia, France and many other countries has undermined the global economic outlook, with record numbers of new cases forcing some countries to impose fresh restrictions as winter looms.[MKTS/GLOB]
“We think demand from this point onwards is really going to struggle to grow. COVID-19 restrictions are all part of that,” said Commonwealth Bank of Australia (CBA) commodities analyst Vivek Dhar.
CBA expects U.S. oil to average $38 and Brent to average $41 in the fourth quarter this year.
Prices got some support from a potential drop in U.S. production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Monday the worst is over for the crude market.
But his comment contradicted an earlier remark from OPEC’s secretary general, who said any oil market recovery may take longer than hoped as coronavirus infections rise around the world.
Meanwhile, Libyan production is expected to reach 1 million barrels per day (bpd) in the coming weeks, the country’s national oil company said on Friday, a quicker return than many analysts had predicted.
That is likely to complicate efforts by the Organization of the Petroleum Exporting Countries (OPEC) to restrict output to offset weak demand.
An analyst survey by Reuters ahead of data from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday estimated that U.S. crude stocks rose in the week to Oct. 23, while gasoline and distillate inventories fell.
Oil Future close 26th October, 2020
Brent crude: $ 40.46 (-1.31) /brl FM delivery Dec (FM=Front Month)
Light crude (WTI): $ 38.56 (-1.29) /brl FM delivery Dec
Gasoil ARA; $ 320.25 (-14.75) /mton FM delivery Nov
NY Harbor Ulsd: $ 345.36 (-9.08) /mton FM delivery Nov
Oil Futures trading at GMT 06.06; Brent: $+0.29, WTI: $+0.28.
Expect Fuel Oil prices to drop 8 - 10 usd/mton (Fuel Oil, means 380 HS plus VLSFO together).
MGO expected a drop around 15 usd/mton and NY Harbor Ulsd a drop of 9 usd/mton. All prices based on Oil Future close last night Monday evening.
After yesterday’s relatively big oil price drop, made the oil market rebound today.
Will it hold all day? Well, the Covid 19 vaccine seems to develop in a positive direction according to AstraZenica, which could cheer up the market.