MABUX: Bunker market this morning, Oct.16
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) demonstrated slight upward evolution on Oct.15:
380 HSFO – USD/MT – 297.23 (+2.75)
VLSFO – USD/MT – 353.00 (+1.00)
MGO – USD/MT – 417.89 (+0.94)
Meantime, world oil indexes decreased on Oct.15 as new restrictions to stem a surge in COVID-19 infections increased uncertainty over the outlook for economic growth and a recovery in fuel demand.
Brent for November settlement decreased by $0.16 to $43.16 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for November delivery fell by $0.08 to $40.96 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.20 to WTI. Gasoil for October delivery lost $1.50 – $341.50.
Today morning oil indexes do not have any firm trend so far.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.8 million barrels from the previous week. At 489.1 million barrels, U.S. crude oil inventories are about 11% above the five year average for this time of year. In gasoline, the EIA reported an inventory draw of 1.6 million barrels for the week to October 9. In distillate fuels, the EIA estimated a stock decline of 7.2 million barrels, compared with a 1-million-barrel draw a week earlier. Distillate fuel inventories remain at seriously inflated levels because of the uneven recovery in the demand for different fuels.
Some European countries are reviving restrictions and lockdowns to try to contain the rise in new coronavirus cases, with Britain expected to impose tougher COVID-19 restrictions on London from midnight on Oct.16.
Russia’s crude producers, which have reduced oil drilling by as much as one-third so far this year, may cut it by a further 20% in 2021. Russia has made unprecedented output cuts this year under a deal with the Organization of Petroleum Exporting Countries that’s set to last through April 2022. Though that helped support crude prices, they are again under pressure as the coronavirus surges, and threatening oil drilling everywhere. OPEC and its allies are also debating whether to proceed with its plan to ease the curbs from January.
OPEC said the OPEC+ alliance will ensure oil prices do not plunge steeply again when it meets to set policy at the end of November. A technical OPEC+ committee meeting took place on Oct.15 to discuss compliance with oil cuts and market fundamentals. It is reported, that the group had 102% compliance with its cuts in September. Countries such as Iraq, Nigeria and the United Arab Emirates, which had fallen short of their commitments, have been asked to make additional cuts until the end of the year to compensate for the shortfalls.
The Petroleum Safety Authority Norway (PSA) said, that company responses to the coronavirus pandemic may have contributed to deteriorating safety at Norway’s oil and gas infrastructure, which has seen 50 serious incidents so far this year—double that from the same time last year and four times higher than in 2018. The Norwegian authority is concerned that maintenance delays and changes to turnaround schedules due to the pandemic could delay the necessary servicing of oil and gas infrastructure.
European Commission has presented methane emission reduction strategy. The strategy, which sets out measures to cut methane emissions in Europe and internationally, presents legislative and non-legislative actions in the energy, agriculture and waste sectors. One of the priorities under the strategy is to improve measurement and reporting of methane emissions. The level of monitoring currently varies between sectors and Member States and across the international community.
Low oil prices, lower credit availability, and piling debt loads forced a few dozen oil and gas firms in North America to file for bankruptcy protection in the third quarter. As many as 44 oil and gas producers, oilfield services companies, and midstream companies sought protection from creditors in bankruptcy courts between July and September. At the moment, banks are set to lend money only for the value of producing wells, not prospective wells. So shale drillers are likely to receive credits only for wells that currently generate cash flow that can repay the loans. As per some forecasts, the 2020 crisis will result in annual declines in shale production this year and next, while the average growth rate over the next decade will be less than one-fifth that of the previous three years
We expect bunker prices do not have any firm trend today and may change irregular in a range of plus-minus 1-3 USD.