Bunker Market this morning, 30th July, 2020
Oil edges up after sharp U.S. crude inventory drop.
Oil prices rose on Wednesday after a steep drop in U.S. crude inventories, but another record day for coronavirus cases worldwide kept gains in check.
Brent crude futures LCOc1 settled at $43.75 a barrel, up 53 cents, or 1.2%. U.S. West Texas Intermediate crude futures CLc1 settled at $41.27 a barrel, gaining 23 cents, or 0.6%.
U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, the largest drawdown since December.
Net U.S. crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said.
The fall in crude stocks was likely a result of supply cuts, agreed in April by the Organization of the Petroleum Exporting Countries and its allies, finally being realized.
“The expectation is that the OPEC cuts are going to lead to bigger draws in the United States and this could be the beginning of it,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
A record number of new coronavirus infections were reported globally. In the United States, more then 150,000 people have died from the novel coronavirus – the most for any country – having risen by 10,000 in 11 days, according to a Reuters tally.
“The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases,” said Stephen Brennock of oil brokerage PVM.
Six U.S. states reported one-day records for coronavirus deaths and Texas cases passed the 400,000 mark.
Attempts to provide relief amid the outbreak were in disarray after U.S. Republicans on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid. The U.S. Federal Reserve pledged to continue to help prop up the economy, providing some support to oil.
Oil holds steady as virus concerns weigh on demand hopes.
Oil prices were little changed on Thursday, restrained by concerns that surging coronavirus infections could jeopardize a recovery in fuel demand just as major oil producers are set to raise output.
The most active Brent crude contract for October was up 4 cents or 0.1% at $44.13 a barrel at 0330 GMT. The September Brent contract, which is expiring on Friday, was unchanged at $43.75 a barrel in light trading.
U.S. West Texas Intermediate (WTI) crude futures were down one cent at $41.26 a barrel.
Both benchmark contracts rose on Wednesday after the U.S. Energy Information Administration (EIA) reported the largest one-week fall in crude stocks since December.
U.S. crude inventories fell by 10.6 million barrels in the week to July 24 to 526 million barrels, compared with analysts’ expectations for a 357,000-barrel rise.
However, U.S. gasoline and distillate stocks, which include diesel and heating oil, both rose against expectations for inventories to fall – highlighting the patchy nature of the recovery in fuel demand.
“The market’s relative non-plussed reaction to the colossal beat on the EIA print was likely due to a report including a considerable fall in U.S. imports,” said Stephen Innes, chief global market strategist at AxiCorp.
“The gasoline glut provides the poor eye candy in the report, which reinforces the fact this is not your typical U.S. driving season as the pandemic continues to ravage the U.S. sunbelt.”
Prices were anchored on Thursday by demand concerns with a rise in COVID-19 infections raising the prospect for lockdowns to be reimposed.
“As long as we’re recording new daily cases, the risk for oil demand is just too strong,” said Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia.
Deaths from COVID-19 topped 150,000 in the United States on Wednesday, while Brazil, with the world’s second-worst outbreak, set new daily records of confirmed cases and deaths. New infections in Australia hit a record on Thursday.
The potential hit to the demand rebound comes just as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, are set to step up output in August, adding about 1.5 million barrels per day to global supply.
Oil Future close 29th July, 2020
Brent crude: $ 43.75 (+0.53) /brl FM delivery Sep
Light crude (WTI): $ 41.27 (+0.23) /brl FM delivery Sep
Gasoil ARA; $ 377.25 (+6.25) /mton FM delivery Aug
NY Harbor Ulsd: $ 385.84 (+3.45) /mton FM delivery Aug
Oil Futures trading at GMT 07.24; Brent: -$0.08, WTI: -$0.06.
Oil Market closed upward based on relative big draw from U.S. crude inventories. Demand concerns with a rise in COVID-19 is hampering the expected demand for oil.
Expect bunker prices to increase, Fuel Oil +2-4 usd/mton, MGO +6 usd/mton and
NY Harbor Ulsd +4 usd/mton.
Trend: Expect the general bunker price trend irregular today. As long as we’re recording new daily cases COVID-19, the risk for oil demand is just too strong and oil prices is likely to drop.
Note: Always start to predict today’s bunker prices in accordance to Oil Future differentials at closing the day before. – Don’t create bunker prices from current Oil Futures, due to too short trading period, also live and changing values every split second. Use the current live Oil Future prices only as a guidance for what can be expected forward like tomorrow.