MABUX: Bunker Market this morning, Oct 15
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
Oil Market close, Wednesday evening
Oil rises 2% as OPEC complies with production cuts.
Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases.
Early in the day crude was boosted by a bullish stock market. Even as equities whipsawed on pandemic worries, oil stayed higher, buoyed by expectations that OPEC could staunch a supply glut.
Wall Street’s main indexes opened higher on Wednesday, supported by heavyweight technology stocks. The dollar traded lower, which can boost oil as investors switch asset classes.
“Between the dollar, the EIA and the warning from the IEA that may impact future OPEC policy, the tone has turned bullish here,” said Bob Yawger, director of energy futures at Mizuho in New York.
Data from the U.S. Energy Information Administration (EIA)is expected to show crude oil stockpiles moving lower in the latest week, according to analysts polled by Reuters [EIA/S]
The American Petroleum Institute said U.S. crude inventories fell more than expected in the latest week, according to a report released after market close on Wednesday. Analysts expect the U.S. Energy Information Administration data to confirm that draw on Thursday, a Reuters poll showed.
Brent crude futures for December delivery settled up 87 cents, or 2.05%, at $43.32 a barrel. U.S. West Texas Intermediate futures also traded higher, settling up 84 cents, 2.09%, at $41.04 a barrel.
OPEC+ had 100% compliance with a pact to cut oil supply in September was seen at 102%, two OPEC+ sources told Reuters.
The Organization of the Petroleum Exporting Countries’ (OPEC) conformity with the oil output reduction in September was 105%, while non-OPEC compliance was 97%, one of the sources said.
“There is a risk that the demand recovery is stalled by the recent increase in COVID-19 cases in many countries,” the International Energy Agency said on Wednesday.
OPEC cut its oil demand forecast on Tuesday, citing economic dislocations caused by the virus.
Russian Energy Minister Alexander Novak said that leading oil producers will start easing output curbs as planned in January despite a spike in coronavirus cases.
Oil Market today, Thursday morning
Oil prices edged higher on Thursday, extending their 2% gains from the previous session, after data showed U.S. crude stockpiles fell last week, while OPEC and its allies were seen complying with their pact to curb output in September.
U.S. West Texas Intermediate (WTI) crude futures climbed 8 cents, or 0.2%, to $41.12 a barrel at 0430 GMT, while Brent crude futures rose 7 cents, or 0.2% to $43.39 a barrel.
Oil markets climbed for a third day despite a resurgence in COVID-19 infections across Europe potentially denting fuel demand.
“The energy markets are certainly marching to their own drummer at the moment,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking, adding that recent oil price volatility may have attracted more trader positions.
The American Petroleum Institute industry group said U.S. crude, gasoline and distillate inventories all fell in the week to Oct. 9, according to a report released after market close on Wednesday.
Crude stockpiles fell by 5.4 million barrels, while distillate stockpiles, which include diesel and heating oil, fell by 3.9 million barrels. Those drawdowns were nearly double analysts’ expectations in a Reuters poll.
“Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.
“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”
Brent may retreat to $42.55 per barrel, after failing to break a resistance at $43.44, Reuters technical analyst Wang Tao said on Thursday.
The U.S. Energy Information Administration is due to release its weekly data on Thursday, a day later than normal following a public holiday.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, had 102% compliance with their agreement to cut oil supply in September, two OPEC+ sources told Reuters ahead of a meeting of the OPEC+ technical committee on Thursday to review the oil market.
ANZ Research pointed to sharp gains in China’s crude oil imports in September and buying by India’s refiners ahead of two big festivals helping support the market.
Oil Future close 14th October, 2020
Brent crude: $ 43.32 (+0.87) /brl FM delivery Dec (FM=Front Month)
Light crude (WTI): $ 41.04 (+0.84) /brl FM delivery Nov
Gasoil ARA; $ 343.00 (+3.75) /mton FM delivery Nov
NY Harbor Ulsd: $ 367.12 (+7.23) /mton FM delivery Nov
Oil Futures trading at GMT 05.00; Brent: $+0.07, WTI: $+0.08.
Fuel Oil prices expected to increase by 5 - 7 usd/mton
(Fuel Oil, means 380 HS plus VLSFO together).
MGO and NY Harbor Ulsd expected increase by 4-7 usd/mton.
Above indications are based on Oil Future close last night 14th October.
The Oil Market is still trending upward, whether this trend will continue today is difficult to say. Much of the stockpiles fall was due to the effects of Hurricane Delta, which closed many oilrigs. All those rigs are working again and oil price is coming to a resistant level.
The U.S. Energy Information Administration is due to release its weekly data today.