MABUX: Bunker Market this morning, Sep. 25
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued downward evolution on Sep.24:
380 HSFO - USD/MT - 438.11(-10.46)
180 HSFO - USD/MT - 475.86(-9.47)
MGO - USD/MT – 680.11(-0.52)
Meantime, world oil indexes fell on Sep.24 as data on anemic manufacturing in Germany and Japan underscored a gloomy outlook for global demand amid renewed concerns about the U.S.-China trade war.
Brent for November settlement decreased by $1.67 to $63.10 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery fell by $1.35 to $57.29 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.81 to WTI. Gasoil for October lost $6.00.
Today morning oil indexes continue moderate downward movement.
U.S. President Donald Trump sharply criticized what he called China’s unfair trade policies in an address at the United Nations General Assembly, helping to stoke fears trade tensions between the two countries would remain elevated, impacting oil demand. Trump’s comments fanned market uncertainty over the world’s top two economies reaching a trade pact soon. That also helped put some selling pressure in the market.
Last weekend’s drone attacks on Saudi Arabia’s oil infrastructure sidelined a total of 5.7 million barrels per day of oil production. This incident demonstrates the vulnerability of global oil supplies. It could reintroduce a fear premium back into the oil and fuel markets. The ultimate impact on the price of oil and fuel will be determined by how quickly Saudi can return production to normal. If such a significant outage like this was extended, it’s not out of the question that oil prices will turn into firm upward evolution up to $85-100 a barrel. But if Saudi gets production back quickly, the market will probably quickly forget about this until the next incident. There is no any historical experience: the world has never seen an outage this large.
The attacks on vital Saudi oil infrastructure would also likely mean that the Kingdom will not list its oil giant this year. The attacks on the Abqaiq facility and the Khurais oil field in Saudi Arabia on September 14 had investors anxious as the Kingdom had just accelerated plans to list Saudi Aramco in what would be the world’s largest initial public offering (IPO) ever. The heightened security risks following the attacks and Aramco’s actual ability to restore production could undermine the valuation of the company at this time.
Sluggish manufacturing numbers in leading European economies and Japan also weighed on prices. There is a constant revision downward for 2019 oil demand, with many forecasters predicting demand to grow around 1 million barrels per day (bpd) or less. Given continued U.S. production growth and new production in Norway and Brazil, the market feels oversupplied, even though Saudi oil production has been impacted over the past 10 days.
RF Prime Minister Dmitry Medvedev signed the decree for Russia’s ratification of the Paris Agreement. Introducing the relevant legislation to curb emissions is the logical next step. Russia is the world’s fourth-largest emitter of greenhouse gases, so its commitment to the Paris Agreement goals is significant. The ratification decree set a target of 25-30 percent of emissions in 1990, to be reached by 2030. However, Russia is already emitting less than it did in 1990. In 2017, emissions were 32 percent lower than they were in 1990. This means the economy could effectively increase its emissions and still be within its own targets.
On Sep.23 Iran released the detained British oil tanker, the Stena Impero, which had been held since July. The move might soften tensions a bit. British Prime Minister Boris Johnson said that Iran was likely responsible for the Abqaiq attack and he also declined to rule out British participation in a military response. There could be efforts by the U.S. to build a coalition of some kind to counter Iran in the UN General Assembly which is underway this week. But as per forecasts, Trump may face an uphill battle in his effort to mobilize international pressure against Tehran.
The American Petroleum Institute (API) has estimated a surprise crude oil inventory build of 1.38 million barrels for the week ending September 19, compared to analyst expectations of a 768,000-barrel draw. Last week saw a surprise build in crude oil inventories of 592,000 barrels, according to API data. The EIA estimated that week that there was larger inventory build of 1.1 million barrels. After this inventory move, the net draw for the year is 23.93 million barrels for the 39-week reporting period so far, using API data. US crude oil production as estimated by the Energy Information Administration showed that production for the week ending September 13 stayed at 12.4 million bpd for the third week in a row.
We expect bunker prices may continue today slight downward evolution in a range of minus 6-9 USD.