MABUX: Bunker market this morning, Nov 02
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) continued moderate downward trend on Oct.30:
380 HSFO: USD/MT 289.21 (-1.64)
VLSFO: USD/MT 334.00 (-1.00)
MGO: USD/MT 399.75 (-2.71)
Meantime, world oil indexes changed irregular on Oct.30: rising COVID-19 cases in Europe and the United States heighten concerns over fuel consumption.
Brent for December settlement decreased by $0.19 to $37.46 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by $0.38 to $35.79 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.67 to WTI. Gasoil for November delivery gained $1.00 – $305.00.
Today morning oil indexes continue downward trend.
Governments across Europe imposed fresh restrictions this week to curb the spread of the coronavirus, with Germany saying its economy will not fully recover before 2022. While that has reduced mobility and fuel consumption within Europe, demand in the United States is holding up for now.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia (OPEC+) had planned to raise output by 2 million barrels per day (bpd) in January. However, top producers Saudi Arabia and Russia are in favour of maintaining the group’s current output reduction of about 7.7 million bpd into next year in the face of lockdowns in Europe and rising Libyan oil output.
It is also possible, that the three biggest OPEC producers behind Saudi Arabia may not be on board with extending the current cuts into next year. Iraq, the United Arab Emirates (UAE), and Kuwait - the biggest OPEC producers behind Saudi Arabia – are reportedly not particularly inclined to support a rollover of the cuts of 7.7 million barrels per day (bpd), because such cuts are too deep for their economies and budget incomes to sustain. The reported unwillingness of OPEC producers to agree to keep the deep cuts could become a source of renewed tension in the cartel and the larger OPEC+ group, and create new conflicts when the alliance meets later this year to set the course for 2021.
According to the International Energy Agency (IEA), thirty-five percent is the size of the spending cuts oil and gas companies are likely to have made this year in response to the effects that the coronavirus pandemic is having on demand. Demand for oil has certainly improved in some parts of the world, notably in Asia, where governments have been more successful in containing the spread of the coronavirus than their counterparts in Europe and North and South America. But even in China—the world’s oil demand recovery driver—the rebound is slowing down. As per the IEA, the impact that the pandemic is having on investments in the oil industry will continue to be felt for years to come. The agency noted a 45-percent cut in investments by U.S. shale oil companies this year, combined with a 50-percent jump in financing costs.
A refinery in northern Venezuela suffered a blast on Oct.29. An investigation into the attack has been launched. According to the report, a crude oil distillation unit at the Amuay refinery had exploded. The distillation unit has a capacity of 100,000 bpd. The Amuay facility as a whole has a capacity of 635,000 bpd. As for preliminary information, the damages to the distillation unit appear initially to be so severe that the unit could be irrecoverable and may have to be rebuilt completely.
Prices for LNG earlier this year fell below $2/MMBtu (JKM prices), a dramatic collapse due to oversupply. The crash forced widespread LNG cancellations from the United States. JKM prices have since surged above $7/MMBtu, but the rally took a breather last week. U.S. LNG has returned, adding supply to the Asian market. Also, Asian buyers are finishing up their winter purchases, so the demand pressure could ease.
The total number of active oil and gas rigs in the U.S. increased for the week by 9, with oil rigs rising by 10 and gas rigs falling by 1. Total oil and gas rigs in the United States are now down by 526 compared to this time last year. The EIA’s estimate for oil production in the United States rose in the week ending October 23—rebounding from 9.9 million barrels in the week prior to 11.1 million barrels of oil per day. U.S. oil production has been bouncing around between just under 10 million bpd to 1.1 million bpd for months now as the pandemic continues to sap demand for crude oil.
We expect IFO bunker prices may decrease by 1-3 USD today while MGO prices may change irregular in a range of plus-minus 1-3 USD.
