MABUX: Bunker market this morning, Sept 28
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 slight irregular changes on September 25:
380 HSFO: USD/MT 292.71 (+1.90)
VLSFO: USD/MT 342.00 (+3.00)
MGO: USD/MT 404.80 (-0.38)
Meantime, world oil indexes also demonstrated multidirectional changes on Sep.25.
Brent for November settlement decreased by $0.02 to $41.92 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November declined by $0.06 to $40.25 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.67 to WTI. Gasoil for October delivery added $4.50.
Today morning oil indexes decline as COVID-19 infection rates in the U.S. threaten a recovery in demand.
The continued revival of coronavirus cases in both Europe and North America fed fears about the demand outlook, as local restrictions on social mixing were tightened further in a raft of U.K. cities, including London and the Welsh capital Cardiff. In the U.S., a rapid rise in COVID-19 cases across Great Plains and Southern states has exacerbated concerns over future U.S. demand.
According to the Norwegian labor union– Norwegian Oil and Gas Association (NOG) - Norwegian oil and gas workers are to strike on Sept. 30 - an action that could take some 900,000 barrels of oil equivalent a day off world markets. Much of that is gas output, which will have no direct bearing on oil prices, but any action could cause a short term deficit in Europe.
More crude is also being exported from OPEC producers Iran and Libya despite efforts by the OPEC+ to limit output.
Iranian exports had risen sharply in September, despite the pressure from U.S. sanctions. TankerTrackers consultancy could see close to 1.5 million bpd in both crude and condensate this month. These are levels haven’t been seen in a year and a half. Iran is typically forced by U.S. sanctions to disguise the final destination of its exports. But however they reach global markets, any increase in Iranian supplies can only depress prices at a time when demand growth is flattening out after rebounding in the third quarter.
Libya’s National Oil Corp said last week it expects production to rise to around 260,000 barrels per day, by this week, up from some 100,000 bpd before the blockade of its oil ports and oilfields lifted by forces aligned to renegade general Khalifa Haftar. It is estimated now that total Libyan production could reach 550,000 bpd by the end of the year and nearly 1 million bpd by mid-2021. The shifting market dynamics could force OPEC back to the drawing board, to figure out what to do with unexpected new supply.
Still, OPEC Secretary General Mohammad Barkindo said on Sep.27 that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year.
According to Baker Hughes, U.S. energy firms last week added oil and natural gas rigs for a second week in a row as some drillers return to the wellpad now that crude prices have held gains made since recovering from coronavirus-linked lows in the spring. The oil and gas rig count, an early indicator of future output, rose by 6 to 261 in the week to Sep. 25. In September, the rig count rose a second month in a row. U.S. oil rigs rose by 4 - to 183 rigs last week, while gas rigs rose by 2 - to 75
Russia was the biggest exporter of crude oil to China last month, for the second month in a row. Saudi Arabia came the second, but its exports to the world’s top importer fell by 300 percent in August. Russia shipped 1.37 million bpd to China last month, down both on the month and on the year but ahead of Saudi Arabia’s average of 1.24 million bpd. Russia was also China’s top oil supplier for the first eight months of the year, according to the customs data.
We expect bunker prices may demonstrate slight irregular changes today in the limits of plus/minus 1-3 USD.