MABUX: Bunker market this morning, Nov.30
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) demonstrated slight irregular changes on Nov.27:
380 HSFO - USD/MT - 326.40 (-0.49)
VLSFO - USD/MT – 393.00 (-1.00)
MGO - USD/MT – 460.54 (+0.79)
Meantime, world oil indexes increased on Nov.27 ahead of an OPEC+ meeting.
Brent for January settlement increased by $0.38 to $48.18 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January rose by $0.60 to $45.53 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.65 to WTI. Gasoil for December delivery added $2.50.
Today oil indexes slight down as the market waits to see if OPEC+ will extend supply caps in January 2021.
The OPEC+ ministers are scheduled to meet on November 30 and December 1, and rumors state that they are leaning towards delaying 2021’s planned increase in oil output. It is likely, that the alliance will choose to delay the 2-million bpd tapering decision on November 30 by a quarter, from January 1 to April 1. Informal talks between the ministers happened on November 28. Most participants in discussion supported maintaining production curbs at current levels into the first quarter, but met opposition from the United Arab Emirates and Kazakhstan Iraq. They would like the restrictions to be expired, as their oil-dependent economies have been feeling the pinch of both low prices and low production volume. If the existing agreement is revised this week, producers will restart about 1.9 million barrels a day of halted output, potentially pushing the global market back into surplus and undermining the recent surge in crude prices.
On Nov. 26 Nigeria's President Muhammadu Buhari also said his country needed to produce more oil to support its economy and build infrastructure for its sizeable population, many of whom are poor. He urged OPEC to consider that when sharing oil production cuts. Nigeria, earlier this month, asked OPEC to reevaluate its oil production quota by categorizing its Agbami field as condensate. In response, Algeria, which currently holds the OPEC presidency, said any attempt to change oil production quotas could lead to oil market collapse.
Both of main oil benchmarks were up by almost 7% over the last week. These gains happened after positive news on a possible coronavirus vaccine from AstraZeneca and others dominated the headlines. Nevertheless, doubts have come up over AstraZeneca’s “vaccine for the world”, with many scientists sounding cautious over the trial results. At the same time, even if a successful vaccine rollout should break the link between infection and mobility, global oil demand will likely only reach its pre-pandemic run rate by the middle of 2022.
Positive signs for demand continue to emerge from China, with at least one fuel supplier already gearing up for an expected surge in air travel ahead of the Lunar New Year holiday. Meanwhile, Chinese refiners may ramp up fuel shipments in December after they received more export quota and as returns from making diesel improve in Singapore.
Moreover, the China Manufacturing Purchasing Managers Index (PMI) has risen faster than expectations, at 52.1 as opposed to a forecast 51.5. China, the world's second-largest economy and top oil importer, expanded factory activity at its fastest in more than three years in November, keeping on track to be the first major economy to fully recover from the coronavirus crisis.
Alongside strong demand from Asia, there are signs consumption is also gradually improving elsewhere. Foot traffic in U.S. airports hit the highest since March before the Thanksgiving holiday, though it remains about 1.5 million people lower year-over-year, according to data from the U.S. Transportation Security Administration.
We expect bunker prices may demonstrate upward changes today: 1-3 USD up for IFO and 2-4 USD up for MGO.
