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MABUX: Bunker market this morning, May 02

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) slightly rose on May 01 despite of celebration of the Labor Day in more than 170 countries:

380 HSFO – USD/MT – 433.21(+2.07)
180 HSFO – USD/MT – 476.57(+1.21)
MGO – USD/MT – 653.14(+0.57)

Meantime, world oil indexes changed irregular on May 01 after data showed record U.S. crude oil production, which resulted in a surge in stockpiles.

Brent for July settlement increased by $0.12 to $72.18 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June delivery dipped by $0.31 to $63.60 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.58 to WTI. Gasoil for May delivery rose by $1.00.

Today morning oil indexes do not have any firm trend so far.

The global economy is once again showing some worrying signs of a slowdown, opening up a major downside risk to oil prices. Global trade volumes are declining for the first time since the end of the 2008-2009 financial crisis. Between December and February trade volumes contracted by 0.8 percent compared to the same period a year earlier.

Saudi oil minister Khalid al-Falih told the Russian press that OPEC+ should maintain production cuts in some form through the end of the year. The news rendered some support to fuel indexes.

The biggest oil importers in Asia collectively bought 1.57 million bpd of oil from Iran in March, a 36-percent surge over February, as buyers rushed to use up the U.S. sanction waivers for Iranian oil purchases before they expire today. In November last year, the U.S. granted sanction waivers to eight key Iranian oil buyers, including these four Asian customers, to continue importing oil at reduced volumes. Amid uncertainties whether they would get their waivers extended, the Asian importers hurried to buy and load Iranian oil for March, to have enough time to close transactions in case their waivers end. The U.S. announced last week that it was ending all waivers for Iranian oil, which expire on May 02.

There is a particular squeeze on heavier oil, with heavier crude from Russia contaminated, and heavy Venezuelan crude sanctioned on top of Iranian oil sanctions and issues with other heavy crude producers like Angola, which faces its own difficulties in output. Countries that continue to produce at high volumes, like the United States, are supplying a much lighter crude which does not satisfy the same sectors of the market. It is quite possible, that heavy crude prices may rise in a near-term outlook, that, in turn, may cause a rise in prices for heavy bunker fuel 380/180 HSFO.

Venezuela’s opposition leader and self-declared interim president Juan Guaido has announced what he has termed the final phase in the opposition’s plan to take over the country from the Nicolas Maduro government. However, there was no visible escalation between opposition supporters and government forces so far. According to the country’s Foreign Minister, Jorge Arreaza, the Guaido announcement and the events that followed were part of an attempt at a coup d’etat backed by the United States and Colombia. For now, it is unclear what the effect on Venezuela’s oil production will be. Some sources inside Venezuela’s oil industry say that operations have not yet been impacted. Anyway, further destabilization in Venezuela is still a potential supportive factor for fuel prices.

Meantime, Venezuela’s opposition in the National Assembly is set to vote on legislation seeking the approval from the U.S. Treasury Department to tap frozen funds in order to allow Citgo to make an interest payment. Citgo has been put into the hands of the Venezuelan opposition, but is at risk of creditor action if it can’t make payments. Citgo is one of the top assets the opposition has and would be key in building a new regime in Venezuela.

The IEA reported that Iraq is set to be the world’s fourth largest oil producer by 2030, adding more than 1 million bpd over the next decade to top 6 million bpd. If it succeeds, Iraq would only trail the U.S., Saudi Arabia and Russia. However, Iraq will need large volumes of water for oil field injections to realize these goals.

U.S. crude oil inventories surged nine times more than expected last week, adding a huge increase to a recent trend of builds: a drop in refining activity, rise in imports and record high domestic production all came together to overwhelm traders. Crude stockpiles rose by 9.9 million barrels in the week to April 26, versus forecasts for a build of 1.5 million. U.S. crude production, meanwhile, rose by 100,000 barrels, to a record high of 12.3 million barrels per day.

We don’t expect any firm trend today. Bunker prices may change in a range of plus-minus 3-5 USD.
Source: Marine Bunker Exchange

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