MABUX: Bunker Market this morning, Nov 26
The Bunker Review was contributed by Marine Bunker Exchange (MABUX)
Oil prices climbed nearly 2% to their highest in more than eight months on Wednesday, as data showing a surprise drop in weekly U.S. crude inventories extended a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.
Brent crude rose 75 cents, or 1.6%, to settle at $48.61 a barrel, its highest since early March.
U.S. West Texas Intermediate crude also closed at its highest since early March, rising 80 cents, or 1.8%, to $45.71. Both benchmarks, which gained 4% on Tuesday, rose for a fourth straight session.
U.S. crude inventories fell by 754,000 barrels last week, government data showed, surprising analysts who in a Reuters poll had predicted a 127,000-barrel rise. Inventories at Cushing, Oklahoma, the delivery point for WTI, fell by 1.7 million barrels.
But gasoline demand for the week fell by 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June.
“There was a decent drawdown at Cushing, so that’s supportive. It was probably the most bullish aspect of this report,” John Kilduff, partner at Again Capital LLC in New York.
Still, demand worries capped price gains as U.S. weekly gasoline demand dropped by about 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June 2020.
“Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia,” said UBS oil analyst Giovanni Staunovo.
“We maintain our bullish outlook for next year and target Brent to hit $60 per barrel at the end of 2021,” he added.
A weaker dollar also supported crude prices, making greenback-denominated oil less expensive for buyers holding other currencies.
Brent has moved into backwardation, a market structure in which oil for immediate delivery costs more than supply later. Backwardation encourages inventories to be drawn down and suggests receding fears of a glut.
OPEC+, made up of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, is leaning towards delaying next year’s planned increase in output despite a rise in prices, three sources close to OPEC+ said.
Oil rose for a fifth day on Thursday after a surprise fall in U.S. crude inventories gave further legs to a rally driven by optimism that vaccines will end the coronavirus pandemic and revive demand for fuels.
Brent futures were up 45 cents, or 0.9%, at $49.06 a barrel by 0245 GMT, after rising around 1.6% in the previous session. West Texas Intermediate crude was up by 34 cents, or 0.7%, at $46.05 a barrel, having gained 1.8% on Wednesday.
Both benchmarks have risen about 9% this week, getting a boost after AstraZeneca said on Monday its COVID-19 vaccine could be up to 90% effective, adding to the potential armoury to end the worst pandemic in a century.
Encouraging vaccine results are “pushing aside concerns of enduring containment measures and prompting some follow-through buying from the speculative community,” Citigroup Global Markets said in a note.
Still, it warned that “a pullback cannot be ruled out amid less robust demand in the near term.”
U.S. President-elect Joe Biden has urged people to forgo big family gatherings, wear protective masks and maintain social distancing for the Thanksgiving holiday in the face of the surging coronavirus pandemic. But Americans are defying pleas from officials to stay home.
The United States has recorded 2.3 million new infections in the past two weeks.
Oil Future close 25th November,
Brent crude: $ 48.61 (+0.75) /brl FM delivery Jan (FM=Front Month)
Light crude (WTI): $ 45.71 (+0.80) /brl FM delivery Jan
Gasoil ARA; $ 389.25 (+0.50) /mton FM delivery Dec
NY Harbor Ulsd: $ 426.88 (+8.34) /mton FM delivery Dec
Oil Futures trading at GMT 06.37; Brent: $+0.32 WTI: $+0.25. – Tendency upward.
We expect fuel oil prices to increase in smaller numbers today plus 5-6 USD/MTON. (Fuel Oil, means 380 HS and VLSFO together). MGO price is expected to remain unchanged and NY Harbor ULSD to increase 8 USD/MTON.
All prices are based on Oil Future close yesterday evening Wednesday.