MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) change insignificant and irregular on Aug.17:
380 HSFO – USD/MT – 308.63 (+0.14)
VLSFO – USD/MT – 366.00 (0.00)
MGO – USD/MT – 445.67 (-0.62)
Meantime, world oil indexes rose on Aug.17 as OPEC+ producers almost fully complied in July with their global production cut accord.
Brent for October settlement increased by $0.57 to $45.37 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September delivery rose by $0.88 to $42.89 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.48 to WTI. Gasoil for September delivery gained $0.50 – $375.00.
This morning, global oil indexes demonstrate some signs for upward correction.
A sharp rise in COVID-19 cases in France and Italy over weekend led the authorities to impose some new restrictions.
Market sentiment soured after the United States and China delayed a review of their Phase 1 trade deal initially slated for Saturday, citing scheduling conflicts. However, in a positive signal, Chinese state-owned oil firms have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September.
OPEC and its allies have achieved the oil-market equivalent of a high-wire act: increasing supply even as demand remains depleted, without crashing prices. Whether they can successfully continue the balancing act is unclear. However, the outlook for fuel demand has deteriorated as the pandemic crushes international travel, and new outbreaks of the disease are weighing on the economic recovery. On Aug.19, key OPEC+ members will meet to consider how to safe-guard their recent success.
China’s recovering economy and the government stimulus to infrastructure activities are set to boost demand for heavy machinery and diesel to power them. Other factors contributing to the high demand for diesel include booming e-commerce with road freight deliveries and strong mining activities. China’s diesel consumption in 2020 could increase by between 60,000 bpd and 90,000 bpd to reach a record of 3.8 million bpd-4.1 million bpd, beating the previous all-time high from last year. While diesel demand is set for an all-time high, demand for gasoline is forecast to be either flat year over year, or to post a small single-digit decline.
Most US onshore operators will restore nearly all shut-in oil volumes by the end of the third quarter, with only a handful maintaining some level of reduction for the rest of the year. The pace of reactivation has accelerated since July. As much as 373,800 bpd of net production, or 48% of the cuts made in May, was restored in July, followed by an additional net volume of 232,200 bpd slated to be back in August. Only a handful of operators intend to wait until September to reactivate the last of their curtailed volumes.
Despite tightening U.S. sanctions, Venezuela’s PDVSA has managed to ramp up its oil exports this month, with the daily average hitting 325,000 barrels, which was the highest in four months. The increase comes due to diesel-for-crude swaps, which are not covered by U.S. sanctions, at least for the time being. Meanwhile, production has continued to fall, to a bit over 100,000 bpd, compared with some 2 million bpd Venezuela produced three years ago before the government in Caracas fell in the crosshairs of the Trump administration. For now, however, this low production rate does not affect exports because Venezuela has quite a bit of oil in storage.
The majority of EU members consider, the hostile U.S. position on the Gazprom-led Nord Stream 2 pipeline project is a breach of international law. The European Union communicated a sharp note of protest against U.S. interference in the construction of the pipeline to Washington. The note was supported by 24 of the EU’s 27 members. The United States last month warned the companies helping Russia to complete the Nord Stream 2 and the TurkStream 2 natural gas pipelines that they should ‘get out now’ or face the consequences, as the Trump Administration steps up efforts to stop the construction of the controversial Russia-led pipelines in Europe.
We expect IFO bunker prices may go upward by 3-5 USD today, MGO prices will stay steady.