MABUX: Bunker market this morning, Feb 12
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 downward changes on February 11:
380 HSFO - USD/MT 356.08 (-3.38)
VLSFO - USD/MT 543.00 (-5.00)
MGO - USD/MT 594.76 (-5.56)
Meantime, world oil indexes increased on Feb. 11 reports that the outbreak of the coronavirus in China may be peaking. However, doubts still remain about the extent and timing of future output cuts from major producers.
Brent for April settlement increased by $0.74 to $54.01 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March rose by $0.37 to $49.94 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.07 to WTI. Gasoil for February delivery added $1.75.
Today morning oil indexes continue upward trend as China reported its lowest daily number of new coronavirus cases since late January, stoking hopes that fuel demand in the world's second-largest oil consumer may begin to recover from the epidemic.
The number of confirmed new cases on Feb.11 was down 19% from the previous day’s level and a senior Chinese epidemiologist told he expected the virus to have peaked by the end of the month. Even so, analysts at Oslo-based Rystad estimate global oil demand growth will fall by 900,000 barrels a day in the first quarter, with China accounting for one third of that.
JPMorgan has slashed its forecasts for Chinese GDP growth this quarter to around a 1% annualized pace, on the assumption that contagion peaks in March and factories slowly resume opening this month. It then expects a rebound to an annualized 9.3% in the second quarter.
OPEC+ still awaits a response from Russia on whether it would back deeper cuts and extend the current deal through until the end of the year. The larger OPEC+ meeting is still scheduled for 5 and 6 March, but many in the market see this as waiting too long to take action to offset the demand destruction. Oil prices indicated that global markets face a renewed surplus as Asia’s coronavirus hits demand, with discounts on prompt supplies emerging across the Brent futures curve.
As the glut begins to accumulate, leading oil traders such as Vitoil SA, Royal Dutch Shell Plc and Litasco SA are seeking to hoard crude on vessels at sea. One Chinese energy company has invoked a legal clause to avoid taking delivery of liquefied natural gas. The North Sea crude market, priced using Brent, suffered an “immediate collapse” when shipments to Asia were disrupted. With Europe also receiving shipments from the U.S., “a surplus can quickly be created.”
Yet the latest signals from the group have deflated those hopes. Azerbaijan’s Energy Minister said on Feb.10 that the alliance probably wouldn’t meet before it’s scheduled March meeting.
And days after promising to announce Russia’s position, Energy Minister Alexander Novak would only say on Feb.11 that Moscow is considering the proposal. Russian President Vladimir Putin met Igor Sechin, chief executive of Russia’s largest oil producer Rosneft, but it gave no indication on whether Moscow is willing to accept an OPEC+ proposal to further curb oil production. No other details from the meeting were disclosed.
Sechin, has openly criticized the existing deal, saying it helps the United States increase its dominance of the global oil market while countries taking part lose out. Yet Russian Energy Minister Alexander Novak said that Russia was still studying the deeper cuts by OPEC+.
According to the American Petroleum Institute (API) U.S. crude oil inventories rose sharply last week - by 6 million barrels. The previous report showed a gain of 4.2 million barrels. The API snapshot serves as guide ahead of the official government inventories numbers, which come out later today. It is expected the Energy Information Administration to report a rise in inventories of about 3 million barrels.
We expect bunker prices may increase today: USD 1-3 up for IFO and USD 1-3 up for MGO.
