MABUX: Bunker market this morning, Dec.04
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO Gasoil) in the main world hubs) demonstrated upward changes on Dec.03:
380 HSFO – USD/MT – 326.60 (+2.15)
VLSFO – USD/MT – 395.00 (+3.00)
MGO – USD/MT – 463.06 (+2.18)
Meantime, world oil indexes also increased on Dec.03 on renewed hopes for a U.S. stimulus deal and after major oil producers agreed to increase output by a modest 500,000 barrels per day (bpd) from January.
Brent for February settlement increased by $0.46 to $48.71 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January rose by $0.36 to $45.64 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.07 to WTI. Gasoil for December delivery added $6.00.
Today oil indexes continue to rise after major producers agreed to continue to restrain production to cope with coronavirus-hit demand but the compromise fell short of expectations.
OPEC and Russia on Dec.03 agreed to ease deep oil output cuts from January by 500,000 barrels per day, failing to come to a compromise on a broader policy for the rest of next year. OPEC+ will meet once a month to review conditions and monthly increases will not be greater than 500,000 barrels per day (bpd). Monthly meetings by OPEC+ will make price moves more volatile and complicate hedging by U.S. oil producers. The increase means OPEC+, are set to reduce production by 7.2 million bpd, or 7% of global demand from January, compared with current cuts of 7.7 million bpd. OPEC+ was expected to continue existing cuts until at least March, after backing down from plans to raise output by 2 million bpd.
In addition to the agreement for adding 500,000 bpd of production back in, OPEC+ members that are laggards in sticking to their production quotas will have to make up the difference between now and March.
At the same time, higher prices prompted U.S. producers last week to boost output for a third week in a row for the first time since May 2019.
Demand expectations from the vaccine and U.S. stimulus are also support oil indexes. Republicans in the U.S. Congress struck a more upbeat tone on Dec.03 during coronavirus aid talks as they pushed for a slim $500 billion measure that previously was rejected by Democrats who say more money is needed to address the raging pandemic.
Oi indexes have jumped higher since early November, when medicals companies Pfizer and Moderna confirmed the efficacy and safety of their vaccines for preventing Covid-19, which traders expect to result in a smart rebound in demand next year.
We expect bunker prices may demonstrate upward changes today: 1-3 USD up for IFO and 4-6 USD up for MGO.