MABUX: Bunker market this morning, Apr. 29
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs continued to decline on Apr. 28:
380 HSFO – USD/MT – 201.88 (-6.23)
VLSFO – USD/MT – 226.00 (-9.00)
MGO – USD/MT – 307.27 (-7.68)
Meantime, world oil indexes demonstrated slight irregular changes on Apr. 28.
Brent for June settlement increased by $0.47 to $20 .46 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June fell by $0.44 to $12.34 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $8.12 to WTI. Gasoil for May delivery increased by $0.75.
Today morning oil indexes rise after U.S. stockpiles rose less than expected and on expectations demand will increase as some European countries and U.S. cities moved to ease coronavirus lockdowns.
Hopes for at least some demand recovery put a floor under oil prices, following two days of selling in June contracts by exchange-traded funds looking to avoid the extreme volatility which hit WTI last week. That, because of plans for removing COVID restrictions, particularly in Europe – in countries likes Spain, France, Austria and Switzerland.
At the same time, on April 27, the United States Oil Fund, said it would sell off all its contracts for June delivery, replacing them with longer-term contracts. In addition, S&P Global is reported to have told clients to roll all their exposure out of WTI June futures and into July with immediate effect. This unscheduled roll is being implemented based on the potential for the June 2020 WTI crude oil contract to price at or below zero as well as the steady decline in open interest for the June 2020 contract. Some are wary that WTI futures could repeat last week’s fall into negative territory when its June contract expires on May 19, with no real signs of a recovery in demand and storage space fast running out.
According to the American Petroleum Institute, U.S. crude inventories rose by 10 million barrels to 510 million barrels in the week to April 24, compared with expectations for a build of 10.6 million barrels. The U.S. Energy Information Administration releases weekly data later today. While storage is rapidly filling up, production cuts by U.S. shale producers, estimated by consultants Rystad Energy at 300,000 barrels per day (bpd) for May and June, should help slow flows into tanks. Regulators in the U.S. state of Texas, the country’s biggest oil producer, will hold a vote on May 5 on whether to enact output curtailments. Officials in the states of North Dakota and Oklahoma are also examining ways to legally allow output cuts.
Russian Energy Minister Alexander Novak said on Apr.28 oil markets would start balancing out once an output deal takes effect in May while no significant rise in prices is likely in the near future due to high levels of global storage.
Argus reported on Apr.28 that OPEC member Nigeria has set its official prices for May at discounts of more than $5 a barrel to prompt North Sea cargoes, partly because it lacks onshore storage to wait out better times. At current levels, that would imply much of its oil will sell for less than $10.
Credit rating agency Moody’s cut its oil price assumptions on Apr.28, seeing WTI averaging $30 a barrel in 2020 and $35 in 2021, because of a global recession weighing on fuel demand and said it expected ample oil supply in storage to keep prices low through 2021.
We expect bunker prices may rise slightly today: 1-3 USD up for IFO, 1-3 USD up for MGO.