MABUX: Bunker Market this morning June, 05
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) declined on June. 04
380 HSFO – USD/MT 379.07 (-4.43)
180 HSFO – USD/MT 428.29 (-3.42)
MGO – USD/MT 614.50 (-13.21)
Meantime, world oil indexes demonstrated slight irregular changes on June. 04
Brent for August settlement increased by $0.69 to $61.97 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for July delivery rose by $0.23 to $56.07 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.49 to WTI. Gasoil for June delivery declined by $1.25.
Today indexes decrease dragged down by a surprise gain in U.S. inventories and comments from the head of Russian state oil producer Rosneft questioning the point of a deal with OPEC to withhold supplies.
According to American Petroleum Institute, crude inventories rose by 3.5 million barrels in the week to May 31 to 478 million, compared with expectations for a decrease of 849,000 barrels. Official numbers from the U.S. Energy Information Administration are due out later on Wednesday.
Escalating trade tensions, particularly between the U.S. and China, have hit crude prices as analysts warned that increasing tariffs could hamper demand at a faster rate than supply tightened. Meanwhile China’s commerce ministry on June 3 urged dialogue and negotiation to solve trade differences with the United States. At the same time China warned its companies operating in the United States, they could face harassment from U.S. law enforcement agencies.
At the same time, U.S. President Donald Trump brought the fight back to Mexico with plans to steadily increase tariffs on Mexican goods if the country does not stop to immigrants illegally cross the border.
Venezuelan PDVSA’s oil exports took another hit in May, following a deadline for customers to wind-down purchases in order to comply with U.S. sanctions. Company’s exports of crude and refined products fell 17% in May from the previous month to 874,500 barrels per day (bpd), mainly due to difficulty in selling off barrels of upgraded crude that used to be bought by U.S. refiners. Venezuela has drained oil inventories since late January, when Washington imposed sanctions on PDVSA, to offset declining crude output. That allowed the firm to maintain exports around 1 million bpd for the following three months despite the measures. At the same time some customers ended purchases of Venezuelan oil in late April to comply with sanctions, leaving PDVSA with an accumulation of upgraded oil and further reducing its portfolio of regular buyers.
OPEC plans to decide later this month or in early July whether to continue withholding supply. The kartel together with Russia, have strongly hinted that there will be extended production cuts to support oil prices. But on June 4, the head of oil giant Rosneft, Igor Sechin, said Russia should pump at will and he would seek compensation from the government if cuts were extended. Russia’s average daily oil output has nonetheless dropped to a three year-low after contaminated crude clogged its main export route.
Saudi Energy Minister Khalid al-Falih said on June 3 that a consensus was emerging among producers to continue working to sustain market stability in the second-half of the year. Producers are concerned that the economic slowdown will reduce fuel consumption.
Further pressuring oil prices and undermining OPEC’s efforts to tighten the market has been surging U.S. output, which has made America the world’s biggest crude producer, at 12.3 million barrels per day (bpd) at the end of May, versus 11.11 million bpd produced in Russia and 9.65 million bpd pumped by Saudi Arabia.
Federal Reserve Chairman Jerome Powell’s said that the central bank will do what it takes to keep the near-record expansion of the U.S. economy going. That provided the lift of oil indexes. Powell was the second senior Fed official in as many days to suggest the central bank might be open to dropping interest rates to help the U.S. economy maintain its near decade-long expansion. St. Louis Fed President James Bullard was more direct in suggesting on June 3 that the central bank might need to cut rates due to low inflation and threat to economic growth from President Trump’s tariffs battles with some of the most important trading partners of the United States.
Expect bunker prices little change today: 2-4 USD up for IFO, 1-3 USD down for MGO.