MABUX: Bunker market this morning, Dec 07
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) rose on Dec.04:
380 HSFO: USD/MT 330.19 (+3.59)
VLSFO: USD/MT 400.00 (+5.00)
MGO: USD/MT 467.25 (+4.19)
Correlation between the Market Bunker Price Index (MBP) vs MABUX Digital Bunker Price Index (DBP) in four major hubs on Dec.04 still showed overcharging of 380 HSFO and VLSFO bunker grades in all selected ports, including 380 HSFO in Rotterdam (plus 1 USD against minus 6 USD on Dec.03). MGO LS remained slightly undervalued in all ports except Houston (plus 5 USD on Dec.04).
Meantime, world oil indexes rose on Dec.04 as expectations of a U.S. economic stimulus package and the possibility of a vaccine for the coronavirus overrode rising supply and increased COVID-19 deaths.
Brent for February settlement rose by $0.54 to $49.25 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery increased by $0.62 to $46.26 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.99 to WTI. Gasoil for December delivery gained $1.00 – $397.50 .
Today morning oil indexes do not have any firm trend so far.
OPEC and Russia last week agreed to slightly ease their deep oil output cuts from January by 500,000 barrels per day but failed to find a compromise on a broader and longer term policy for the rest of next year. The increase means the OPEC+ would move to cutting production by 7.2 million bpd, or 7% of global demand from January, compared with current cuts of 7.7 million bpd. The curbs are being implemented to tackle weak oil demand amid a second coronavirus wave. Russia noted that the group would now gather every month to decide on output policies beyond January with monthly increases not exceeding 500,000 bpd.
The development of multiple vaccines that are expected to allow a return to normal life next year, coupled with the fact that the dip in demand caused by the latest wave has not been as severe as many feared, allowed the OPEC+ bloc to accommodate pressure from countries led by the United Arab Emirates who had argued for raising the production ceiling.
The International Energy Agency (IEA) said energy efficiency is expected to record this year its weakest progress in a decade, creating additional challenges to the world achieving international climate goals. Plunging investments and the economic crisis have markedly slowed the progress in energy efficiency this year, to half the rate of improvement seen in the previous two years. As a result, global primary energy intensity, a key indicator of how efficiently the world’s economic activity uses energy, is expected to improve by less than 1 percent in 2020, the weakest rate since 2010.
Saudi Arabia’s crude oil exports to the United States fell to the lowest in 35 years in October, averaging less than 100,000 bpd. To compare, the Saudis shipped as much as 1.3 million bpd to the United States in April, when they sent a fleet of supertankers to flood the U.S. market with oil during the price war with Russia at the end of March and early April. U.S. total oil imports, meanwhile, have been on the decline, too. For the four weeks to November 27 these averaged 5 million bpd, down by 10.5 percent on a year ago.
Meantime, Saudi Aramco expects oil prices are set to see a meaningful recovery in the second half of next year. The prospects of vaccine rollout early next year and signs of a strong recovery in oil demand in Asia makes Aramco optimistic about the oil market’s prospects next year, especially in the latter half. Aramco continues to bet on expanding in the downstream to take advantage of expected growth in petrochemicals.
The number of oil rigs in the United States rose by 5 to 246—the highest number of rigs since mid-May. Total oil and gas rigs in the United States are now down by 476 compared to this time last year. The EIA’s estimate for oil production in the United States is now at 11.1 million barrels of oil per day as of the most recent reporting period, with U.S. production still rangebound between 9.7 million bpd and 11.1 million bpd for months.
We expect IFO bunker prices may add 2-4 USD today while MGO prices may rise by 1-3 USD.
