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MABUX: Bunker market Expected to Be Volatile Today

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) rose slightly on Mar.25:

380 HSFO – USD/MT – 410.14(-9.07)
180 HSFO – USD/MT – 458.36(-9.93)
MGO – USD/MT – 630.00(-6.93)

Meantime, world oil indexes changed irregular on Mar.25, as concerns about a slowdown in global economic growth lingered, offset by the prospect of tighter U.S. crude supply.

Brent for May settlement rose by $0.18 to $67.21 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May delivery declined by $0.22 to $58.82 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.39 to WTI. Gasoil for April delivery gained $9.50.

Today morning oil indexes turned into slight upward evolution.

The Federal Reserve signaled a more dovish turn last week, indicating that the central bank may not raise rates at all this year, a dramatic turnaround from the expectation of two rate hikes. The move is very positive for oil and fuel prices, however the justification for backing off more rate hikes is that the central bank sees the global economy slowing more than previously thought.

The opposition-led National Assembly of Venezuela last week voted to suspend crude oil shipments to Cuba after Juan Guaido slammed these exports as funding dark purposes. Guaido’s proposal was voted for unanimously and took immediate effect. However, it remains to be seen whether it will take actual effect as the Maduro government still seems to be in charge of PDVSA. Earlier Guaido tweeted that Venezuela was sending around 47,000 bpd of crude to Cuba and these were worth US$2.58 million that would be better used at home. Venezuela is Cuba’s largest oil supplier under a barter deal sealed by the late leaders of the two countries, Hugo Chavez and Fidel Castro. The deal envisaged Cuba getting regular shipments of crude in exchange for its highly trained doctors and other professionals to work in Venezuela.

Meantime, two Russian planes with 100 troops landed in Venezuela this weekend. The move is the latest signal of strengthening ties between Caracas and Moscow amid growing pressure on the Maduro government from Washington. An explanation given by Russian official sources, said that Russia has various contracts of a technical military character that are in the process of being fulfilled. The news supported fuel indexes and may spark a reaction from Washington as the Venezuelan crisis continues with no resolution in sight despite the increasing pressure that the United States is piling up on the government in Caracas.

Security forces at the Alaas field in northern Iraq have thwarted an attack by Islamic State militants, killing and injuring several attackers. This is the latest in several attacks by the terrorist group on the field after it was driven out of the area in 2017. At the time, Alaas was one of the fields that IS set on fire during its retreat. At present the militants have started targeting oil fields again. In early February, Iraqi media reported two attacks on oil police checkpoint staff in a single weekend. Iraq had oil reserves of 153 billion barrels as of 2017, but there is higher estimate and if it proves true, it would make Iraq the largest oil-rich country in the world, ahead of Venezuela.

U.S. energy firms last week reduced the number of oil rigs operating for a fifth week in a row, cutting nine rigs to the lowest count in nearly a year as independent producers follow through on plans to cut spending with the government cutting its growth forecasts for shale output.

Prices for LNG in Asia collapsed by more than 50 percent from their 2018 highs as a wave of new projects have come online. As per estimation made by Bank of America Merrill Lynch, LNG supply growth of 22 mtpa in 2018 proved too much to handle. Now, it is expected another 46 mtpa supply in 2019 and 27 mtpa in 2020, with most of the volumes coming from the US.

We expect bunker prices for IFO may change irregular in the range of plus-minus 1-2 USD/MT while prices for MGO will rise by 4-8 USD.
Source: Marine Bunker Exchange

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