MABUX: Bunker market this morning, Apr. 16
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs decreased on Apr. 15:
380 HSFO – USD/MT – 241.29 (-7.73)
VLSFO – USD/MT – 280.00 (-11.00)
MGO – USD/MT – 365.63 (-12.60)
Meantime, world oil indexes also decreased on Apr. 15 because of the pessimistic demand forecast from the International Energy Agency.
Brent for June settlement decreased by $1.91 to $27.69 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for May fell by $0.24 to $19.87 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $7.82 to WTI. Gasoil for May delivery fell by $18.75.
Today morning oil indexes rise amid correction.
The International Energy Agency (IEA) on Apr.15 forecasted that oil demand in April is to be 29 million barrels a day lower than a year ago, down to a level last seen in 1995, because no output cut by producers could fully offset the near-term falls facing the market. The IEA also forecasts a 9.3 million bpd drop in demand for 2020.
OPEC and other producers including Russia on Apr.12 agreed a record cut in output from May of 9.7 million bpd, or almost 10% of global supply, to help support prices and curb oversupply. Ahead of that, however, April could be the worst month ever for the industry as production is set to increase while demand tumbles amid economic lockdowns around the world. The Agency added, that oil producers lost two important months, referring to events including the failure of producers in early March to agree on cutting output. Instead, Saudi Arabia, Russia and others pledged to increase production as they looked to grab back market share. Now, in addition to planned supply cuts, some nations are expected to boost buying for strategic reserves. If the transfers into strategic stocks, which might be as much as 200 million barrels, were to take place in the next three months or so, they could represent about 2 million bpd of supply withdrawn from the market.
At the same time, according to the Energy Information Administration (EIA), U.S. stockpiles posted another huge build last week – by 19.25 million barrels – as demand destruction from the Covid-19 pandemic continued. That compared with expectations for a build of about 11.7 million barrels. That brings the rise in inventories to nearly 50 million barrels in three weeks. Gasoline inventories rose by 4.9 million barrels, versus forecasts for a rise of about 6.4 million barrels. Distillate stockpiles climbed by 6.3 million barrels, compared with expectations for a build of about 1.4 million barrels. The Cushing build was nearly 6 million barrels, but exports actually rose by 600,000 barrels on the week, which is probably a flux in data that will get sorted out in the coming weeks. Refining activity itself is under 70% of capacity, when we normally have more than 90% this time of year. Crude production hasn’t fallen off the cliff yet at 12.3 million barrels daily.
We expect bunker prices to continue downward trend today: 7-10 USD down for IFO, 15-18 USD down for MGO.