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MABUX: Bunker market this morning, Mar. 11

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs continued to fall on Mar. 09:

380 HSFO – USD/MT – 290.94 (-18.27)
VLSFO – USD/MT – 393.00 (-35.00)
MGO – USD/MT – 477.75 (-32.44)

Meantime, world oil indexes increased on Mar. 10 after the biggest one-day rout in nearly 30 years, amid the possibility of economic stimulus. At the same time, a looming price war weighed on sentiment.

Brent for May settlement increased by $2.86 to $37.22 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for April fell by $3.23 to $34.36 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.86 to WTI. Gasoil for March delivery decreased by $9.75.

Today morning oil indexes continue to increase amid hopes, that U.S. producers would cut output lent support.

U.S. President Donald Trump on March, 09 said he will take “major” steps to protect the U.S. economy against the impact of the spreading coronavirus outbreak. Trump proposed a series of measures including payroll tax cuts, relief measures targeting specific industries like tourism and hospitality, and support for hourly workers that miss work. Moreover, U.S. shale producers deepened spending cuts that could reduce production.

Japan’s government plans to spend more than $4 billion in a second package of steps to cope with the virus.

Optimism also was lifted after Chinese President Xi Jinping visited Wuhan, the epicenter of the coronavirus outbreak, for the first time since the epidemic began, and as the spread of the virus in China slows sharply. China, the world’s second-largest oil consumer, is trying to get people in hard-hit Hubei province back to work by using a mobile phone-based monitoring system that will allow people to travel within the province.

Crude was also supported by hopes for a settlement to the price war and potential U.S. output cuts, although gains may be temporary as oil demand continues to be hit by the virus outbreak, which has spread beyond China and prompted Italy to implement a nationwide lockdown. U.S. shale producers rushed to deepen spending cuts and could reduce production after OPEC’s decision to pump full bore into a global market hit by shrinking demand.

However, Saudi Arabia, the world’s biggest oil exporter, plans to supply 12.3 million barrels per day (bpd) in April, (current production levels- 9.7 million bpd). That means that April’s crude supply will be 300,000 barrels per day over the company’s maximum sustained capacity of 12 million bpd. At the same time, Russia stepped up its price war with Saudi Arabia by warning it can also raise oil production, while also saying further cooperation with OPEC is possible. Energy Minister Alexander Novak said on March, 09, that Russia could increase output by as much as 500,000 barrels a day in the near future. His statement came just minutes after Saudi Aramco escalated the battle for market share by pledging record oil shipments in April.

Russian oil minister Alexander Novak said he did not rule out joint measures with OPEC to stabilize the market, adding that the next OPEC+ meeting was planned for May-June. At the same time, Saudi Arabia said it sees no reason for the meeting as it will only show the inability to withstand the crisis because of the coronavirus.

At least a quarter of Iran’s oil rigs are out of action as U.S. sanctions strangle the Islamic Republic’s vital oil industry, that can potentially harm the country’s oil industry in the long term. The lack of rig activity could damage the OPEC member’s capacity to produce oil from older fields, which require continuous pumping to maintain pressure and output. That would make it difficult for Iran to raise production back to pre-sanction levels if tensions ease with the United States.

We expect bunker prices to increase today: 10-15 USD up for IFO, 7-11 USD up for MGO.
Source: MABUX

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