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MABUX: Bunker market this morning, Apr. 02

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs declined on Apr. 01:

380 HSFO – USD/MT – 241.83 (-1.84)
VLSFO – USD/MT – 301.00 (-7.00)
MGO – USD/MT – 391.52 (-6.50)

Meantime, world oil indexes demonstrated irregular changes on Apr. 01 as the coronavirus crushes demand amid a price war that has flooded the market with extra supply and shows no signs of ending

Brent for June settlement increased by $2.00 to $24.74 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May declined by $0.17 to $20.31 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.43 to WTI. Gasoil for April delivery fell by $21.00.

Today morning oil indexes increase after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war.

Trump talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war within a “few days” – lowering production and bringing prices back up. He also said he would be meeting with oil executives, where he is expected to discuss a range of options to help the industry amid the sharp hit to demand as the coronavirus outbreak has hammered industrial activity and kept cars off the road.

Speaking at a government meeting on Wednesday, Putin said that both oil producers and consumers should find a solution that would improve the “challenging” situation of global oil markets.

The collapse in prices means global spending on oilfield equipment and services this year will fall 21% from 2019 to $211 billion, the lowest level since 2005. Still, there has been some upside from the collapse in prices as China has increased U.S. crude purchases with some buyers snapping up cargoes at the widest discounts ever as sellers seek to offload excess supplies in Asia. Cheap U.S. energy supplies will help China lower its import costs, but the deep discounts will add further pressure on U.S. producers to shut in production.

At the same time, the world’s biggest oil and gas companies are cutting spending this year following a collapse in oil prices driven by a slump in. Cuts already announced by eight major oil companies, including Saudi Aramco and Royal Dutch Shell, come to a combined a drop of 20% from their initial spending plan. BP cut its 2020 spending plan by 25% and will reduce output from its U.S. shale oil and gas business. Exxon Mobil Corp said it would cut capital expenditure but has not given specific figures yet. Brazilian oil company Petrobras said it was dialing back short-term production, delaying a dividend payment and trimming its 2020 investment plan. Some say if the current crisis is prolonged, the spending cuts announced by major oil companies may not be enough to let them maintain dividends without adding to their already elevated levels of debt.

Saudi Arabia raised production above 12 million barrels a day on Apr.01, following through on threats it made in recent weeks. That’s about two million barrels a day more than a month ago. Also weighing on prices, OPEC failed to agree on whether to meet this month for an emergency discussion on recent volatility in oil markets. This signaled a widening rift between members and reduced the likelihood of supply cuts in the near future.

According the Energy Information Administration (EIA), stockpiles of U.S. crude climbed much more than expected last week, day, indicated that Covid-19-related demand destruction is being reflected in inventories. Oil inventories rose by 13.8 million barrels last week. That compared with expectations for a build of about 4 million barrels. That was the biggest build in three years.

We expect bunker prices to change irregularly today: 8-10 USD up for IFO, 15-10 USD down for MGO.
Source: MABUX

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