MABUX: Bunker market this morning, Apr. 22
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs fell on Apr. 21:
380 HSFO – USD/MT – 221.13 (-13.68)
VLSFO – USD/MT – 257.00 (-16.00)
MGO – USD/MT – 343.52 (-16.03)
Meantime, world oil indexes continued to fall on Apr. 21 as the panic that sent U.S. May futures to below almost minus $40 per barrel on Monday bled further into the markets due to worries about the coronavirus pandemic’s effect on fuel demand in a market overrun by supply.
Brent for June settlement decreased by $6.24 to $19.33 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June fell by $8.86 to $11.57 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $7.76 to WTI. Gasoil for May delivery fell by $45.75.
Today morning oil indexes are mixed recovering from its collapse on Apr.20.
After the epic fall of May WTI contract, the market turned its attention to the successive front-month, June, mauling it on news that the state of Texas won’t cut output yet despite immense supply glut and scarce storage for oil. The Railroad Commission of Texas, which oversees oil and gas companies, delayed a vote on controversial production cuts demanded by midsized shale oil drillers but opposed by big energy firms. The commission wanted input from the state’s attorney general.
With available storage in short supply, nobody wants to hold a contract about to come due. U.S. shale producers are fast approaching the point where they will be forced to shut down operations. The main U.S. storage hub in Cushing, Oklahoma, the delivery point for WTI is expected to be full within weeks. U.S. President Donald Trump on Apr.21 called on the government to make funds available to the U.S. oil and gas industry, calling Monday’s crash a “financial squeeze”. The U.S. energy secretary said he would talk with leaders in the U.S. House of Representatives later in the day and urge them to fund the purchase of crude to fill the emergency oil reserve.
In March, President Donald Trump ordered Energy Secretary Dan Brouillette to fill the Strategic Petroleum Reserve, or SPR, to the top as the price of oil plunged while the coronavirus crushed global demand. So far, Congress has declined to fund the purchase, with some Democrats opposed to bailing out the oil industry.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, have announced sweeping cuts in production, amounting to almost 10% of global supplies. But with economies virtually at a standstill due to coronavirus lockdowns, demand has dropped as much as 30%. OPEC+ ministers had an unscheduled emergency conference call overnight to discuss the collapse. Although the coalition did not announce new policy measures beyond the 10-million-barrel production cut, some producers led by Saudi Arabia are considering implementing the cuts ahead of scheduled May 1 start date. At the same time, Kremlin spokesman Dmitry Peskov said leading global oil producers could hold talks again to discuss their output deal further if needed.
The American Petroleum Institute (API) announced another huge build in U.S. crude oil stockpiles – 13.226-million-barrel for the week ending April 17.
We expect bunker prices to continue downward trend today: 15-20 USD down for IFO, 25-30 USD down for MGO.