MABUX: Bunker market this morning, Apr.10
The Bunker Review was contributed by Marine Bunker Exchange
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) turned into slight upward trend on Apr.09:
380 HSFO - USD/MT - 427.57(+5.36)
180 HSFO - USD/MT - 472.71(+5.85)
MGO - USD/MT - 645.14(+2.35)
Meantime, world oil indexes slipped on Apr.09 as Russian comments signaling the possible easing of a supply-cutting deal with OPEC.
Brent for June settlement decreased by $0.49 to $70.61 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May delivery lost $0.42 to $63.98 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 6.63 to WTI. Gasoil for April delivery dropped by $3.50.
Today morning oil indexes are steady.
It is expected that Russia will press for an end of the OPEC+ production cuts after the end of June when the original agreement expires. On Apr.09, President Vladimir Putin said Russia did not support an uncontrollable rise in oil prices and that the current price suited Moscow.
It is also quite possible that given the improving market situation and falling stocks, OPEC+ could decide in June this year to abandon supply cuts and subsequently increase output. This decision will not mean the end of the deal but a confirmation that participants continue their coordinating efforts when it is important not only to cut but to increase output depending on market conditions. Russia’s oil companies have been reluctant to take part in the production cuts this time around. In fact, there were reports earlier this year that Rosneft and other state entities were pushing for an end of Russia’s participation in the pact so they could start ramping up production again.
Meanwhile, Saudi Arabia also had comments to make about the agreement: it is too early to say whether the agreement would be extended beyond the end of June, while that next month would be crucial for where OPEC+ would go in the second half of the year.
The situation in Libya escalated rather quickly last week when the Libyan National Army, a formation affiliated with the eastern Libyan government, launched an attack on the UN-recognized cabinet in Tripoli. The attack followed a statement by LNA leader General Khalifa Haftar that Libya will soon have a single government, sparking hopes of a negotiation between the two rival governments. The turmoil could threaten Libya’s oil supplies. Civil war, as well as more minor skirmishes involving pipelines and oil fields, has repeatedly disrupted Libya’s oil production and exports. For now, the rise in tension is enough to send oil and fuel prices higher. Libya pumps around 1.1 million barrels per day (bpd), just over 1 percent of global oil output.
Venezuela and Iran continue to be the usual suspects when it comes to near-term oil and fuel price projections with U.S. sanctions targeting the oil industry of both countries as a regime-changing tool. The latest shipping data revealed that Venezuela’s March oil exports remained surprisingly stable on February despite the string of blackouts, at a daily rate of around 900,000 bpd. As for Iran, the situation’s development shows that Washington’s aim of bringing down the country’s oil exports to zero is at least unrealistic for now: the higher prices rose, the more demand there will be for Iranian oil.
China is set to import massive amounts of LNG in 2019 as part of its determined push to switch away from coal and toward the lower emissions natural gas, but this robust demand is unlikely to curb the current inventory glut in Asia. While China’s LNG demand growth is set to increase by 14 percent in 2019 over 2018 levels—between 30 billion and 40 billion cubic meters—it’s lower than the 2018 demand growth of 18 percent. This demand growth is also likely to be lower than supply, which has increased dramatically over the last year as Australia, United States, and Russia increase production. New production for LNG this year is expected to surpass LNG demand by 2 percent. On the demand side of the equation, these low LNG prices are still above pipeline gas prices, and as the new Russia pipeline comes onstream to carry gas to China (is expected to come online in December 2019), demand for LNG may falter.
The average production cost for a barrel of oil in Nigeria has declined to just US$23 a barrel. Nigeria is taking part in the latest OPEC+ round of production cuts and it is supposed to be producing less than 1.9 million bpd. The country, exempt from the first round of cuts, was initially reluctant to join the agreement but Saudi Arabia convinced it to take part. It has yet to reduce its production to the quota set it by the cartel.
The American Petroleum Institute (API) reported a build in crude oil inventory of 4.1 million barrels for the week ending April 5, coming in over analyst expectations of a ¬2.294-million-barrel build. Last week, the API reported a surprise build in crude oil of 3.0 million barrels. A day later, the EIA confirmed the build, but a much more significant: a 7.2 million buildup in inventory. The U.S. Energy Information Administration report on crude oil inventories is due to be released later today.
We expect bunker prices may demonstrate slight downward evolution today in a range of minus USD 1-3.
