MABUX: Bunker market this morning, Dec 11
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 in the main world hubs) changed irregular on December 10:
380 HSFO: USD/MT 330.49 (+0.91)
VLSFO: USD/MT 406.00 (+3.00)
MGO: USD/MT 467.62 (-4.43)
Correlation of the Market Bunker Prices (MBP) Index vs the MABUX Digital Bunker Prices (DBP) Index in four largest hubs showed that 380 HSFO fuel was still undervalued in Rotterdam on December 10 (minus 4 USD) while in Singapore the MBP and DBP Indices for 380 HSFO were 100-percent correlated. In Fujairah and Houston, 380 HSFO remained overpriced. VLSFO has been also overcharged in all four selected ports. At the same time, MGO LS remained undervalued in all ports (in a range of minus 14-23 USD), with the exception of Houston (was overvalued by 8 USD).
World oil indexes surged on Dec.10 as hopes of a faster demand recovery after the release of COVID-19 vaccines offset a huge rise in U.S. crude inventories.
Brent for February settlement rose by $1.39 to $50.25 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery increased by $1.26 to $46.78 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.47 to WTI. Gasoil for January delivery gained $19.75 – $418.25 .
Today morning oil indexes do not have any firm trend so far.
Britain began vaccinations this week and they could start as soon as this weekend in the United States. Canada on Dec.09 approved its first vaccine and said initial shots would be delivered starting next week. Any positive developments on the vaccine side are expected to lift fuel indexes.
Optimism driven by OPEC+ finally reaching an agreement how to continue cutting production from January next year also helped pushed prices higher, even though the agreement was for a moderate increase in collective production.
It is forecast that many of the world’s refiners would be squeezed between low demand for finished products and rising inventories as the pandemic lockdowns continue to restrict activity. The warm December that is expected this year is also threatening finished products demand. As a result, many of the older, small refiners may not survive at all. Wood Mackenzie reported that nearly 10 percent of Europe’s high-cost refineries, holding 1.4 million barrels per day of capacity, were in serious threat of closure over the next three years. Besides, the closure of several refineries in the United States in recent months sent the total petroleum refining capacity down to its lowest level since May 2016.
A terrorist attack set ablaze two oil wells at a small oilfield in northern Iraq on Wednesday, but total production at the 25,000-bpd field has not been affected. The incident, while negligible to global oil supply and oil prices, highlights the security concerns that Iraq—OPEC’s second-biggest producer behind Saudi Arabia—continues to face. Meanwhile, Iraq—heavily-dependent on oil revenues, even by OPEC standards, continues to struggle with its budget income with the low oil prices.
We expect IFO bunker prices may add 7-10 USD today while MGO prices may rise by 10-19 USD.
