MABUX: Bunker market this morning, Oct 22
MABUX World Bunker Index (consists of a range of prices for HSFO380, VLSFO and MGO (Gasoil) in the main world hubs) changed irregular on October 21:
380 HSFO: USD/MT 298.95 (+0.47)
VLSFO: USD/MT 350.00 (-1.00)
MGO: USD/MT 414.37 (+0.91)
Meantime, world oil indexes decreased on Oct.21 after U.S. inventory figures showed demand weakening for refined products as global COVID-19 cases spiked.
Brent for November settlement decreased by $1.43 to $41.73 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by $1.67 to $40.03 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $1.70 to WTI. Gasoil for November delivery lost $9.25 – $328.00.
Today morning oil indexes do not have any firm trend so far and change irregular.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels from the previous week. At 488.1 million barrels, U.S. crude oil inventories are about 10% above the five year average for this time of year. The report came a day after the American Petroleum Institute pressured prices by reporting an unexpected build in inventories, at a little over half a million barrels.
Meantime, U.S. distillate fuel oil inventories remained high through summer 2020 because production outpaced demand. The U.S. Energy Information Administration (EIA) expects that increased demand for distillate fuel oil in the agriculture and residential sectors in the coming winter will help to draw down high U.S. distillate inventories. These initially relatively high inventories, along with lower crude oil prices, will continue putting downward pressure on distillate fuel oil prices through the 2020–21 winter season.
China’s flow of crude oil into storage accelerated in September, reversing two months of declines, as the world’s biggest importer of the fuel continued to work its way through massive volumes purchased during a brief April price war. The flow of crude into commercial and strategic stockpiles was about 1.75 million barrels per day (bpd). The rise in flows into storage tanks in September was largely driven by higher crude availability, given that refinery processing was more or less steady, with September’s 13.96 million bpd only just below August’s 14.0 million bpd.
Iraq sees oil prices recovering in Q2 2021 so it plans to increase production capacity. Currently, the OPEC+ production cuts are delaying oil projects in the country. As per statement made by the Iraqi officials, Iraq should increase the capacity to 7 million bpd within six years, compared to its current production capacity of some 5 million bpd. It expects crude prices during January-March 2021 at $45 a barrel. As a result of this expectation, Baghdad will be basing its 2021 budget on an oil price level of $42 a barrel. Iraq is one of the most oil-dependent economies, even by OPEC standards, and has seen its budget revenues plummet after oil prices crashed in March.
The U.S. is broadening the sanctions against service providers and those funding vessels involved in the construction of Nord Stream 2 in another attempt to prevent the Russia-led gas pipeline project from completing. The sanctions are a follow-up to U.S. sanctions on the Nord Stream 2 project from December 2019, which resulted in Western vessel and technology providers pulling out of the project. Now the United States is including in the sanctions companies providing services or facilities for upgrades or installation of equipment for those vessels, or funding for upgrades or installation of equipment for those vessels.
We expect IFO and MGO bunker prices may go downward today by 7-10 USD.