MABUX: Bunker market this morning, May 07
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued downward trend on May 06:
380 HSFO – USD/MT – 420.21(-6.08)
180 HSFO – USD/MT – 466.86(-6.00)
MGO – USD/MT – 654.43(-0.36)
Meantime, world oil indexes changed irregular on May 06 after U.S. President Donald Trump threatened to sharply increase tariffs on Chinese imports.
Brent for July settlement increased by $0.39 to $71.24 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June delivery added $0.31 to $62.25 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of 8.99 to WTI. Gasoil for May delivery lost $9.00.
Today morning oil indexes do not have any firm trend.
Trump said that tariffs on $200 billion worth of Chinese goods would increase to 25% from 10%, reversing a decision he made in February to keep them at the 10% rate thanks to progress in trade talks between the two sides. The first reaction from. China was to consider cancelation of a round of U.S. talks set for this week in the wake of Trump’s comments. However, China said on May 06 a delegation is still preparing to travel to the U.S. for trade talks.
Russia’s oil production will be cut by another 1 million barrels per day over the next week after its oil exports were restricted due to contamination issues. The contaminated crude oil was shipped through Transneft’s Druzhba pipeline, causing the pipeline operator to call on Russian oil producers to request reduced volumes—a 10 percent reduction. European refineries are taking most of the brunt, and have caused Poland, the Czech Republic, and Hungary to release 8 million barrels of oil reserves to keep their refineries refining, and comes at a time when the market is already nervous about tightening supplies as crude production falls in Iran and Venezuela. Transneft is largely expected to resume oil flows over the next couple of weeks, although it may take some time to repair any damaged refinery equipment as a result of the corrosive contaminates found in the crude oil.
The United States is working with oil producers like Saudi Arabia and the United Arab Emirates (UAE) to ensure India has enough crude supply after the end of all sanction waivers for Iranian buyers, but the U.S. can’t ensure its own oil will be sold to India at preferential prices. India has been Iran’s second-largest oil customer after China and has been buying Iranian oil at discount rates as Iran was offering very attractive terms to Indian buyers, including almost free shipping and an extended credit period for payment. The end of the U.S. sanction waivers will hit India hard because it has to pay more for alternate oil supplies.
Chinese LNG demand could reach 80-100 mtpa by 2025 up from 53.7 million tonnes in 2018. Rising demand for the fuel is part of Beijing’s drive to clean up the air quality of the country’s largest cities, which have been plagued by high air pollution levels for years. This drive has seen growth of demand in recent years that has been increasingly met by imports, including U.S.-sourced geopolitically charged gas imports that have also been embroiled in the ongoing trade war between Washington and Beijing. Overall demand for gas is expected to climb to 620 bcm by 2035, up from at 280.3 bcm in 2018.
Also weighing on oil prices are indications of a further increase in output from the U.S., where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the U.S. the world’s biggest producer ahead of Russia and Saudi Arabia. Despite of that the number of active oil and gas rigs fell slightly in the United States last week, after two large drops in the two previous weeks, keeping the overall rig count well below year-ago levels for a third week in a row.
A key oil pipeline and a logistics base in Nigeria’s oil-rich Niger Delta have been impacted by a shutdown and protests. The Nembe Creek Trunk Line—one of the two key pipelines of Nigeria’s Bonny Light crude grade capable of transporting 150,000 bpd to the export terminal—was shut down on May 05 after leaks were detected. The information regarding the possible impact on Nigerian oil exports or when operations and the pipeline flow would return to normal has not yet been provided.
We expect bunker prices may change irregular today in a range of plus-minus 2-6 USD.