MABUX: Bunker market this morning, Aug. 07.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs increased on Aug. 06:
380 HSFO – USD/MT – 305.65 (+1.40)
VLSFO – USD/MT – 363.00 (+2.00)
MGO – USD/MT – 443.88 (+3.19)
Meantime, world oil indexes reduced on Aug. 06 amid the continued spread of COVID-19 worldwide.
Brent for October settlement decreased by $0.08 to $45.09 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September fell by $0.24 to $41.95 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.14 to WTI. Gasoil for August delivery lost $13.50.
Today morning oil indexes continue to decline on worries that fuel demand growth will drop amid a resurgence of coronavirus cases and as talks have stalled in the United States on a new stimulus deal.
The resurgence of coronavirus infections remains the main uncertainty in the oil market, as that will determine how fast fuel demand rebounds. Global COVID-19 cases stand at more than 18,73 million, while total deaths had exceeded the 700,000 mark, according to the data from John Hopkins University.
At the same time, the market is also watching the lack of progress in the talks between the White House and Democrats over the next coronavirus stimulus package, with Democrats saying President Donald Trump may have to issue executive orders if he does not want to negotiate further. The virus relief package remains the last hope to boost fuel demand, with the U.S. driving season coming to an end soon.
Over the week, a weaker U.S. dollar has helped support higher oil prices, as oil is priced in U.S. dollars, making it more attractive to crude buyers in other currencies. The dollar index, which measures the greenback against six major currencies, dropped to its lowest since May 2018 on Aug.06.
According to U.S. Energy Information Administration, U.S. commercial crude inventories fell 7.37 million barrels to 518.6 million barrels for the last week, and narrowed the surplus to the five-year average to about 16%. It was the second week in a row that US inventory stockpiles fell, indicating a clear downtrend after the 10.61 million-barrel decline the previous week. However, there are some worries about rising U.S. refined product inventories at a time when U.S. central bankers said the resurgence in cases was slowing the economic recovery in the world’s biggest oil consumer. EIA data showed distillate stockpiles, which include diesel and heating oil, climbed to a 38-year-high, and gasoline inventories unexpectedly rose for a second week in a row.
OPEC’s second-largest producer, Iraq, is promising additional cuts of around 400,000 barrels per day (bpd) this month in order to compensate for the lack of compliance with the OPEC+ agreement in the previous months. Iraq, which has been the least compliant member of the OPEC+ production cut pact since it was first launched in January 2017, has been promising for months that it would reduce its oil production and fall in line with its quota—something it hasn’t done since 2017. Iraq is said to have recently slashed its crude oil exports, aiming for better compliance with the OPEC+ pact, but it appears it did not make material progress at least through July.
We expect bunker prices may demonstrate downward changes today: 1-3 USD down for IFO and 10-13 USD down for MGO.