MABUX: Bunker market this morning, Sept 29
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) changed insignificant and irregular on September 28:
380 HSFO USD/MT 291.61 (-1.10)
VLSFO USD/MT 344.00 (+2.00)
MGO USD/MT 407.56 (+2.76)
Meantime, world oil indexes edged up on Sep.28 as global equities rallied on hopes for another U.S. stimulus package, but rising virus cases fed concerns about fuel demand.
Brent for November settlement increased by $0.51 to $42.43 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery rose by $0.35 to $40.60 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.83 to WTI. Gasoil for October delivery gained $5.00 – $330.25.
Today morning oil indexes do not have any firm trend so far.
Oil followed Wall Street higher as American political talks continued for another COVID-19 relief bill after U.S. House Speaker Nancy Pelosi on Sunday said she thought a deal could be reached with the White House. However, the global health crisis, which has slashed global fuel consumption, kept prices from moving much higher.
Norwegian oil firms plan to close down 22% of the country's oil and gas output, or 900,000 barrels of oil equivalent per day, if workers go on strike on Sep.30. Some 324 out of 7,300 employees on offshore platforms plan to strike if annual pay negotiations with employers fail. Norway pumps just over 4 million barrels of oil equivalent per day (bpd), half in the form of crude and other liquids and half from natural gas, making it a major global energy supplier.
Russia said that the global oil market has been stable for the past few months and the demand-supply balance restored, but warned of the risks of a second wave of COVID-19 cases. Meantime, production of oil and gas condensate in Russia is projected at 507.4 mln tonnes in 2020, a 9.5% decrease compared with 2019, whereas gas output is expected to drop by 6.4% to 690.8 bln cubic meters. In 2019, Russia’s oil production stayed at a record level of 560.8 mln tonnes. However, Russia’s production will remain under the OPEC+ limitations through 2023. Its recovery to the previous maximum (560 mln tonnes) is probable in 2023.
US crude exports have expanded sharply in recent years following the lifting of US oil export restrictions in December 2015, driven in large part by rising US shale oil production, which increased by 6.1 million bpd between 2012 and Q1 2020 to reach 8.3 million bpd. Shipments reached a record high of 3.5 million bpd in Q1 2020, supported by expanded pipeline infrastructure that boosted crude flows to export terminals.
Iranian oil exports have risen sharply in September in defiance of U.S. sanctions. Exports have shrunk from over 2.5 million barrels per day (bpd) since the United States withdrew from a nuclear deal with Iran and reimposed sanctions in 2018. Still, Iran has been working to get around the measures and keep exports flowing. With the sanctions reducing sales, Iran has been storing unsold oil in tankers at sea. While onshore storage has increased, the volume in floating storage has fallen in 2020, suggesting Iran has found end-users for some of the oil.
In the South Caucasus pipeline corridor, clashes between Azerbaijan and Armenia are giving rise to concerns over the stability of gas and oil supplies routed through the region. The fighting is reportedly the heaviest since 2016.
Commodities trader Trafigura proposed a carbon levy of $250-$300 per tonne of carbon-dioxide (CO2) equivalent on shipping fuels to make zero and low carbon fuels more economically viable and competitive. The International Maritime Organisation (IMO) wants to halve the sector's greenhouse gas output by 2050 against 2008 levels. If left unchecked, global emissions from shipping could balloon by up to 130% by 2050, compared to 2008 levels. As per Trafigura, the revenue raised by the levy would be used to subsidise and incentivise low and zero carbon fuels, funding the research and development of alternative fuels and, in part, developing countries with the energy transition to mitigate the impact of climate change.
We expect IFO bunker prices may add 1-3 USD while MGO prices will gain 3-5 USD.