2020 December 8 09:45

MABUX: Bunker market this morning, Dec 08

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 irregular changes on December 07:

380 HSFO: USD/MT 328.99 (-1.20)
VLSFO: USD/MT 400.00 (0.00)
MGO: USD/MT 468.30 (+1.05)

Meantime, world oil indexes also demonstrated multidirectional changes on Dec.07, as the rise in U.S. COVID-19 cases fed expectations for lower fuel demand.

Brent for February settlement decreased by $0.46 to $48.79 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January fell by $0.50 to $45.76 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.03 to WTI. Gasoil for December delivery added $4.00.

Today oil indexes continue to decline as California tightened its pandemic lockdown through Christmas and coronavirus cases continued to surge in the United States and Europe.

Globally, a sharp rise in coronavirus cases has led to a string of renewed lockdowns, including strict measures in the U.S. state of California as well as Germany and South Korea. California on Dec.07 required most of the state to close shops and stay at home under a new order which will last at least three weeks. Government sources in France said the country may have to delay unwinding some lockdown restrictions next week after signs the downward trend in new cases had flattened out after shops were allowed to reopen late last month.

The Center for Disease Control had advised Americans not to travel home for the holiday, but data had still indicated a heavy week for traffic. OPIS said that demand for motor fuel was down over 19% from a year earlier during the holiday week, while sales of gasoline fell 8.4% from the previous week. It warned that demand could soften even further before the year-end, against a background of spreading restrictions on business and social life. Dr. Anthony Fauci, head of the National Institute for Allergy and Infectious Diseases, told on Monday that the Christmas holiday could prove to be an even bigger challenge than Thanksgiving, given the continued spread of the disease.

In addition to demand worries, some are also focusing on the risk that Iran will be able to increase supplies to the world next year if President-elect lifts sanctions and returns the U.S. to the UN-sponsored deal limiting Iran's nuclear program. However, some argue that Iran could raise exports by 1.2 million barrels a day - a development that the recently-reviewed OPEC+ accord on output levels doesn't take into account.

The international picture for demand is, however, brighter. Chinese customs data released on Dec.07 showed increased imports of crude as refiners again took advantage of a dip in prices due to weaker western demand. China imported an average of 11.3 million barrels a day in the month, up over 9% from a year earlier but still below the volumes seen in spring and early summer, when importers gorged themselves on a world glut.

Trade unions in Nigeria are threatening a three-day strike beginning on Dec.09 that could shut down port operations at Africa’s biggest oil producer and exporter. The Maritime Workers Union of Nigeria, MWUN, demand that the government fix the road access and traffic bottlenecks on the roads leading to the ports. The Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, said it wasn’t on strike, but maritime workers were free to go on a strike if such an action draws the attention of the government to the problem with the roads. Nigeria’s federal government has appealed to the MWUN union not to proceed with the strike, saying that government intervention in fixing the problems was delayed by the pandemic and the recent protests in Nigeria.

Data due from the American Petroleum Institute later today and from the U.S. government on Wednesday is expected to show that U.S. crude stocks fell last week, while refined product stockpiles rose, according to estimates from five analysts polled by Reuters.

We expect bunker prices may demonstrate irregular changes today: 1-3 USD down for IFO and 2-4 USD up for MGO.