MABUX: Bunker market this morning, Aug. 03.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs decreased on July 31:
380 HSFO – USD/MT – 301.30 (-1.82)
VLSFO – USD/MT – 358.00 (-3.00)
MGO – USD/MT – 437.83 (-4.86)
Meantime, world oil indexes demonstrated slight upward changes on July, 31 after data from oilfield services firm Baker Hughes showed the small fall in the number of U.S. oil rigs.
Brent for September settlement increased by $0.36 to $43.30 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September rose by $0.35 to $40.27 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.03 to WTI. Gasoil for August delivery added $4.75.
Today morning oil indexes fall on oversupply concerns as OPEC and its allies wind back production cuts in August and a rise in worldwide COVID-19 cases points to a slower pick-up in fuel demand.
There are worries about oversupply as the OPEC+ is due to start reducing production cuts this month, adding about 1.5 million bpd to global supply and a recovery in oil prices from record lows is likely to encourage U.S. shale producers to ramp up output. However, fuel demand has yet to recover due to the COVID-19 pandemic, which is affecting oil prices.
Oil output by the OPEC rose by over 1 million barrels a day in July as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an OPEC-led deal. The 13-member OPEC pumped 23.32 million bpd on average in June, up 970,000 bpd from June’s revised figure, which was the lowest since 1991. Russia’s oil output in July was unchanged from June levels – level of compliance with the deal in July stood at 99%.
After three consecutive months of raising its crude oil prices, the world’s largest oil exporter, Saudi Arabia, is widely expected to make the first cut to its official selling prices (OSPs) since the OPEC+ group started their record production cuts to prop up the market and prices amid crashing demand. Oil refiners and traders in Asia largely expect the Saudi oil giant Aramco to cut the price of its crude oil going to Asia in September as faltering oil demand recovery is depressing refining margins and weakening the Middle East oil benchmarks against which the producers in the Gulf set their prices for Asia.
U.S. energy firms kept the number of oil and natural gas rigs unchanged at a record low as the rig count fell for a fifth straight month, although July marked the smallest monthly decline. The number of U.S. oil rigs fell by 1 to 180 last week.
At the same time, fears over a resurgence in the coronavirus cases are weighing on the market. An easing of lockdowns and lower supply have helped oil climb above $40 from April’s 21-year low of below $16 a barrel. The Australian state of Victoria declared a state of disaster and authorities in the Philippines said they would impose fresh restrictions in Manila this week, reflecting worries around the world about getting the pandemic under control. In the U.S., one of the largest oil consumers, California, recorded an increase in confirmed COVID-19 cases of more than the 14-day average on Sunday.
We expect bunker prices may demonstrate slight upward changes today: 1-3 USD up for IFO, 3-5 USD up for MGO.