MABUX: Bunker market this morning, Feb.19
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) turned into slight downward evolution on Feb.18:
380 HSFO – USD/MT 362.65(-1.52)
VLSFO – USD/MT 535.00(-4.00)
MGO – USD/MT 596.93(-2.58)
Meantime, world oil indexes changed irregular on Feb.18 on lingering concerns over the economic impact of the coronavirus outbreak in China and its effect on oil demand.
Brent for April settlement increased by $0.08 to $57.75 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March fell by $0.26 to $52.05 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.70 to WTI. Gasoil for March delivery lost $6.25.
Today morning global oil indexes have turned into slight upward trend again.
Commodity trading houses and the trading units of oil majors have hired oil storage in South Korea to keep crude in tanks until Chinese and general Asian demand recovers from the blow the coronavirus outbreak has dealt to the market. Glencore, Trafigura, Mercuria, and the oil trading unit of France’s Total have rented a total of nearly 15 million barrels of oil storage tanks from Korea National Oil Corporation (KNOC). A market situation is signalling oversupply and traders store oil for delivery at a later date. Chinese crude throughputs have been cut by 1.1 million bpd in Q1, and are now expected to drop by 500,000 bpd year-on-year this quarter.
Russia has taken time to review the proposal of the OPEC+ group joint technical committee (JTC) to extend the cuts as-is until the end of 2020 and to deepen those cuts in the second quarter. Russia’s Energy Minister Alexander Novak continues to discuss the OPEC+ deal with his colleagues in the production group. Analysts believe that OPEC+ would need to act in response to the slump in oil demand to prevent a glut and support oil prices.
U.S. believes Russia’s Gazprom will not be able to complete the Nord Stream 2 gas pipeline project on its own due to U.S. sanctions, because Russia doesn’t have the technology. Last month, after the U.S. levied sanctions on companies involved in the construction of the pipeline, Gazprom said it would complete the project on its own. The controversy around the project centers on Ukraine: Nord Stream bypasses the main transit corridor of Russian gas and could, the Ukrainians and the EU fear, reduce Ukraine’s gas transit revenues severely. There is also the geopolitical factor, of course, with the U.S. claiming that the additional pipe will increase Russia’s influence in Europe to unacceptable levels.
Meantime, the United States plans to provide up to US$1 billion to countries in Central and Eastern Europe to help them reduce their dependence on Russian oil and gas. Poland and the Baltic states, which oppose Nord Stream 2 and are trying to wean themselves off Russian energy dependence, will get funds, among others.
The International Maritime Organization’s (IMO) Sub-Committee on Pollution Prevention and Response (PPR) is meeting at the IMO headquarters this week to finalise draft guidelines for the verification of the sulphur content of the fuel oil carried for use on board ships and also continue its work on scrubber guidelines. Market expects IMO will consider the implementation of an Arctic ban on HFO. The use and carriage of HFO in the Arctic is increasing, with a 46% increase in the volume of HFO fuel carried by ships in the Arctic between 2015 and 2017, and a 57% increase in the amount of HFO used. This will increase the risks of HFO spills and impacts from black carbon in the region.
The International Energy Agency (IEA) has reported that it recently held a workshop of experts and stakeholders to ‘step up efforts’ for methane emissions regulation for the oil and gas sector. As per IEA, annual methane emissions from oil and gas are around 80 million metric tonnes. Upstream methane emissions have been a particular critical issue when assessing the overall, life-cycle environmental impact of using liquefied natural gas (LNG) as a marine fuel.
We expect bunker prices may change insignificant and irregular today in a range of plus-minus 1-5 USD.