MABUX: Bunker market this morning, Aug 19.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued downward evolution on Aug.16:
380 HSFO – USD/MT – 346.87(-4.61)
180 HSFO – USD/MT – 392.70(-3.97)
MGO – USD/MT – 633.32(-0.50)
Meantime, world oil indexes demonstrated irregular changes on Aug.16. Brent for October settlement increased by $0.41 to $58.64 a barrel on the London-based ICE.
Futures Europe exchange. West Texas Intermediate for September delivery rose by $0.40 to $54.87 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.77 to WTI. Gasoil for September fell by $0.50.
Today morning oil indexes turned into upward changes as Germany’s leadership pledged to undertake economic stimulus measures and OPEC reported sharply lower crude output in July.
German Chancellor Angela Merkel said on Aug.16 the country’s government would be willing to take on additional debt to stimulate the economy in event of further economic downturn or recession. Germany’s second-quarter 2019 GDP contracted 0.1% compared with the prior quarter, the Federal Statistics Office reported on Aug.14, highlighting fears Europe’s largest economy could fall into recession and contributing to roughly 3% slide in WTI and Brent futures.
In its latest report, OPEC cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market would be in slight surplus in 2020..
In another worrying sign of a brewing supply surplus, OPEC said that oil inventories in OECD countries rose by 31.8 million barrels in June from a month earlier, rising to 67 million barrels above the five-year average. In other words, just as OPEC+ was meeting to extend the production cuts for another 9 months, inventories were rising, an indication of an oversupplied market. At the same time the group revised up demand for its crude by 0.1 bpd for both 2019 and for 2020. However, the demand for its oil, would drop to 29.4 bpd in 2020, down from 30.7 bpd this year. Based on those numbers, OPEC+ is staring down a serious supply glut next year absent further action. The group can either stick with current production levels (that may cause another market downturn), or it can increase further production cuts.
The United States has issued a warrant to seize an Iranian oil tanker caught in the standoff between Tehran and the West in a last ditch effort to prevent the vessel from leaving Gibraltar.
The Grace 1 was seized by British Royal Marines at the western mouth of the Mediterranean on July 4 on suspicion of violating European Union sanctions by taking oil to Syria. Gibraltar lifted the detention order on Thursday after the British territory's chief minister said he had secured written assurances from Tehran that the cargo would not go to Syria. But the United States launched a separate legal appeal to impound the ship and its 2.1 million barrels of oil, on the grounds that it had links to Iran's Islamic Revolutionary Guard Corps (IRGC), which it designates as a terrorist organization. A federal court in Washington issued a warrant to seize the tanker, the oil it carries and nearly $1 million. At the same time, The Grace 1 had its name erased and it was no longer flying a Panama flag. The tanker would depart for the Mediterranean after being reflagged under the Iranian flag and renamed Adrian Darya.
Oil indexes were also supported by attack on a Saudi oil facility by Yemeni separatist. A drone attack by Yemen's Houthi group on an oilfield in eastern Saudi Arabia on Aug.17 caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected.
Meanwhile, White House economic adviser Larry Kudlow said trade deputies from the United States and China would speak within 10 days and could advance negotiations over ending a trade battle between the two countries if those talks pan out. At the same time the U.S. President Donald Trump appeared less optimistic than his aides on striking a trade deal with China,
saying that while he believed Beijing was ready to come to an agreement, he is not ready to make a deal yet.
U.S. energy firms this week increased the number of oil rigs operating for the first time in seven weeks despite plans by most producers to cut spending on new drilling this year
We expect bunker prices will change irregularly today: 2-4 USD up for IFO, 1-3 USD down for MGO.