MABUX: Bunker market this morning, Mar.20.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) declined slightly on Mar.19:
380 HSFO - USD/MT - 418.43(-2.78)
180 HSFO - USD/MT - 466.29(-2.78)
MGO - USD/MT - 638.07(-0.29)
Meantime, world oil indexes traded irregular on Mar.19, after signs that OPEC and allied producers will reinforce their efforts to keep the global market balanced as the world economy slows down.
Brent for May settlement rose by $0.07 to $67.61 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for April delivery slid by $0.06 to $59.03 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.58 to WTI. Gasoil for April delivery gained $4.25.
Today morning oil indexes were stable.
Goldman Sachs reported that resilient demand growth and supply outages could push oil prices up to $70 per barrel in the near future. Supply loses are exceeding expectations, demand growth is beating low consensus expectations with technicals supportive and net long positioning still depressed. A supply deficit could become rather significant, with total oil products demand growth at 1.03 million bpd against supply growth of only 0.3 million bpd.
Uncertainty over US waivers for buyers of Iranian oil is starting to grip the market again. The Trump administration confirms the aim is still to completely halt Iran’s oil shipments as it seeks to increase economic pressure on Tehran. Prices are to be a key determinant for America’s decision on waivers. At current levels, the waivers are likely to be renewed for China, India, Japan, South Korea and Turkey with a 30% to 50% cut in permitted volumes compared to existing limits. If prices move higher, waiver volumes could only be cut by 20% to 30%. Iran’s customers, meanwhile, are making plans – with some assuming the concessions will be renewed while others foreseeing some reductions to permitted purchases.
Saudi Arabia, OPEC’s de-facto leader, and Russia both made promises over the weekend to increase compliance with the deal to cut oil output by 1.2 million barrels per day (bpd) in the first six months of this year. Russia confirmed it will be fully compliant with OPEC-led supply cuts over the coming weeks. Saudi Arabia said in turn, that it was optimistic about the prospect of continued commitment to the OPEC-led production cuts. Meantime, the compliance rates in the first two months of the year are less than levels seen in 2017 and 2018.
OPEC+’s committee on Mar.18 recommended cancelling a planned April meeting, saying it would be too soon to determine whether the cuts should continue into the second half. The change in timing, which still needs to be agreed by the wider coalition, means they probably won’t decide on the extension until late June, just days before they expire.
Venezuela has suspended its oil exports to India and views Russia and China as its main export destinations. The Indian market has been crucial for Venezuela’s economy because it has historically been the second-largest cash-paying customer for the OPEC country’s crude, behind the United States. Earlier this year, the United States imposed heavy sanctions on Venezuela’s oil industry and has pressed India to stop buying Venezuelan oil.
After two-and-a-half years of negotiations, Britain's departure from the European Union remains uncertain, with possible outcomes still ranging from a long postponement, leaving with May's deal, a disruptive exit without a deal, or even another referendum. May is due at an EU summit in Brussels on Mar.21 at which she will ask for a delay to Brexit as Britain seeks a smooth way to leave the EU after 46 years, with a transition period to soften the disruption to trade and regulations. Germany, the EU's most powerful leader, in response said that it will fight until the last minute of the time to March 29 for an orderly exit. If it left this way, Britain would quit the EU's 500 million-strong single market and customs union overnight, falling back on World Trade Organization rules that could mean many import and export tariffs. It would face the prospect of manufacturing and financial market disruption, sharp economic contraction and border delays.
Refining margins have been poor for gasoline, but strong for distillates. That trend will continue ahead of the IMO regulations in 2020 that will reduce sulfur content in marine fuels, raising demand for distillates. Refiners are likely going to reduce planned maintenance periods, or front-load them in the first half of 2019, in anticipation of a strong period leading up to implementation of the IMO rules.
The American Petroleum Institute (API) reported a surprise draw in crude oil inventory of 2.133 million barrels for the week ending March 15, coming in under analyst expectations of a 309,000-barrel build. This is the second week in a row for a surprise draw.
We expect prices for IFO will be stable today while MGO prices may add up to 5 USD/MT.
