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MABUX: Bunker market this morning, Sep.15

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) did not have firm trend and changed irregular on Sep.14:

380 HSFO – USD/MT – 288.55 (+0.16)
VLSFO – USD/MT – 331.00 (-1.00)
MGO – USD/MT – 406.67 (-0.98)

Meantime, world oil indexes dropped on Sep.14 amid concerns about a stalled global economic recovery and falling fuel demand.

Brent for November settlement fell by $0.22 to $39.61 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery decreased by $0.07 to $37.26 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.35 to WTI. Gasoil for October delivery lost $4.25 – $319.75.

This morning, global oil indexes do not have any firm trend so far.

Tropical storm Sally moved over the north-central Gulf of Mexico on Sep.14 before becoming a hurricane as it heads toward south-eastern Louisiana. Energy companies scrambled to pull workers from offshore oil and gas production platforms. Chevron Corp, Equinor and Murphy Oil Corp shut in wells as a precaution, and refiner Phillips 66 halted processing at its Alliance refinery on the Louisiana coast. It warned the storm’s advance would slow in the next two days.

In Libya, commander Khalifa Haftar committed to ending a months-long blockade of oil facilities, a move that would add more supplies to the market, although it was unclear if oil fields and ports would begin operations.

OPEC predicted that world oil demand will fall more steeply in 2020 than previously forecast due to the coronavirus and recover more slowly than expected next year, potentially making it harder for the group and its allies to support the market. OPEC’s estimation is world oil demand will tumble by 9.46 million barrels per day (bpd) this year, more than the 9.06 million bpd decline expected a month ago. Oil prices have collapsed as the coronavirus crisis has curtailed travel and economic activity. While some countries have eased lockdowns, allowing demand to recover, a rising number of new cases and higher oil output have weighed on prices.

OPEC also reported its output rose by 760,000 bpd to 24.05 million bpd in August, as the 9.7 million bpd cut tapered to a reduction of 7.7 million bpd from Aug. 1. That amounted to 103% compliance with the pledges – up from July’s figure of 97%. A monitoring panel of OPEC+ ministers meets on Sep.17 to discuss the market. Some delegates have voiced concern about the drop in prices this month although there are no signs that the group is planning to tweak the supply pact.

Oil trader Trafigura said the oil market is about to go back into surplus as the demand recovery stagnates. Trafigura was among the first to forecast the magnitude of the demand collapse in March and April. Now, the trading house is betting the oil market is about to enter another bearish phase despite the efforts of the OPEC+ alliance to balance supply and demand. According to Trafigura, the main problem is that demand, which recovered sharply over May and June, has plateaued. It’s now around 92 million barrels a day, compared with roughly 100 million barrels a day before the pandemic.

It is expected, that Iran’s electricity grid will be connected with Russia and Azerbaijan in a few months, once grid compatibility studies are completed. Iran, Azerbaijan, and Russia have agreed to set up a company which has already started working on the project to link Iran’s grid to Russia via Azerbaijan. The idea of connecting Iran’s power grid with Russia via Azerbaijan was first aired in March 2019.

The world’s top oil traders have been chartering dozens of supertankers for potentially storing oil at sea amid signs that demand recovery has stalled. Trafigura has chartered 12 very large crude carriers (VLCC), which can collectively hold 24 million barrels of oil. Another 18 supertankers have also been booked by companies including Vitol Group, Shell, and Lukoil. Meantime, day rates for supertankers have tripled in a week.

U.S. voters generally support natural gas production, but nearly half of U.S. registered voters believe the natural gas industry must do more to reduce emissions to have natural gas play a role in fighting climate change. Both Democrats and Republicans have a favorable view of natural gas, with Republicans much more in support of using natural gas as an energy source. There is a lot at stake for the oil and gas industry at the presidential election in November. U.S. President Donald Trump rolled back last month methane emissions rules for oil and gas fields and pipelines, while Democratic candidate Joe Biden has promised more efforts and resources to boost cleaner energy and jobs, but he has said he would not ban fracking.

We expect IFO bunker prices will stay steady today while MGO prices may change irregular in a range of plus-minus 1-4 USD.
Source: MABUX

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