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MABUX: Bunker market this morning, Apr. 24

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. 23:

380 HSFO – USD/MT – 206.44 (-2.69)
VLSFO – USD/MT – 234.00 (-5.00)
MGO – USD/MT – 321.69 (-8.23)

Meantime, world oil indexes increased on Apr. 23 amid rising tensions in the Middle East, output cuts by producing nations to tackle oversupply and the promise of more government stimulus to ease the economic pain of the new coronavirus pandemic.

Brent for June settlement increased by $0.96 to $21.33 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June rose by $2.72 to $16.50 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $4.83 to WTI. Gasoil for May delivery increased by $15.75.

Today morning oil indexes continue to rise as some producers like Kuwait said they would move to cut output swiftly to try to counter the evaporation in global demand for fuels caused by the coronavirus pandemic.

Although the new OPEC+ agreement goes into effect on May 1, OPEC’s fourth-largest producer, Kuwait, has already started to reduce crude oil supply to international markets “sensing a responsibility responding to market conditions.” Kuwait pumped 2.84 million bpd of oil in March, up by 170,000 bpd from February.

While Kuwait signals reductions in supply ahead of schedule, Saudi Arabia declined to comment if it would cut supply before May. Algeria also told OPEC its cuts would begin immediately. Iraq, however, is not planning on reducing production before the start of the new deal.

Oil prices have suffered one of their most extraordinary weeks ever. The expiring front-month U.S. contract on Monday fell into negative territory for the first time as traders paid buyers to take crude off their hands given a lack of storage space for the current supply glut.

Concerns about the collapse in demand because of travel restrictions to contain the coronavirus and a shortage of space to store oil still dominate, but not many expect a repeat of Monday’s price shock.

The rally on Apr.23 followed an announcement from President Donald Trump he had instructed the U.S. Navy to fire on any Iranian ships that harass it in the Gulf, although he added later he was not changing the military’s rules of engagement. This ratchets up tensions once again between the U.S. and Iran. However, it is difficult to predict lasting support to the market, unless the situation does escalate further.

In addition to the OPEC+ deal, other producers are also pledging reductions. Oklahoma’s energy regulator said companies could shut wells without losing their leases. The state is the fourth-largest oil producer in the United States.

Data on Apr.22 showed U.S. crude inventories rose by 15 million barrels in the week to April 17 to 518.6 million barrels, putting them within striking distance of an all-time record of 535 million barrels set in 2017. The stocks build was less than the market had expected, providing some support for prices, while the promise of more government stimulus improved market sentiment across global markets. The U.S. House of Representatives expects to pass a nearly $500 billion coronavirus relief bill on Thursday to provide funds to small businesses and hospitals struggling with the economic toll of the pandemic.

The World Bank said that global commodities markets will face lasting disruption because of the outbreak, while consultancy Rystad Energy further revised down its estimate for global oil demand to 89.2 million barrels a day.

We expect bunker prices to increase today: 6-8 USD up for IFO, 10-15 USD up for MGO.
Source: MABUX

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