MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs demonstrated irregular changes on Aug. 18:
380 HSFO – USD/MT – 310.00 (+1.37)
VLSFO – USD/MT – 360.00 (+3.00)
MGO – USD/MT – 443.81 (-1.86)
Meantime, world oil indexes slightly increased on Aug. 18 ahead of updates on U.S. inventories and OPEC+ meeting on Aug.19 to review the effectiveness of the group’s output restraint deal.
Brent for October settlement increased by $0.09 to $45.46 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for September remained unchanged at $42.89 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.57 to WTI. Gasoil for September delivery added $5.00.
Today morning oil indexes decline amid concerns about U.S. fuel demand recovery, with the U.S. Congress still unable to reach a consensus on the latest stimulus measures to get economic demand recovery from COVID-19 on track.
There are also continuing signs around the world of the virus’ enduring potential to hit demand: South Korea, which imports over 2.5 million barrels a day in normal times, said earlier it will tighten lockdown measures again in response to a flare-up of the coronavirus, while in India – another major importer struggling to contain the virus – the diesel sales have fallen 20% in the first half in August from the same period a month earlier. There is too much crude oil in storage on the market and the current balance of supply and demand is not likely to create sizeable draws of stored crude very soon.
At the same time, according to the industry data from the American Petroleum Institute, U.S. crude inventories fell by 4.3 million barrels to about 512 million barrels, more than analysts’ expectations for a 2.7 million-barrel drawdown. U.S. government inventory data is due later today. It is expected, that oil inventories fell 2.67 million barrels last week, bringing the total draw over the last four weeks to nearly 25 million barrels.
The market is keeping eye on today meeting of a joint ministerial monitoring committee (JMMC) of the OPEC+, which is set to review adherence to a previously agreed deal on oil output cuts. Compliance with the cuts stood at 95-97% in July. Russian Energy Minister Alexander Novak is set to join the video meeting despite having tested positive for the coronavirus.
U.S. President Donald Trump on Aug.18 said he postponed trade talks with China, adding that he does not want to talk to China right now. White House Chief of Staff Mark Meadows told that no new high-level talks have been scheduled between the United States and China, but U.S. Trade Representative Robert Lighthizer remained in regular contact with his counterparts in China about its commitments under the trade agreement. Representatives from the United States and China had been scheduled to discuss implementation of their so-called Phase 1 trade deal on Aug.15, but those talks were canceled.
The administration of U.S. President Donald Trump is weighing additional sanctions on Venezuela aimed at halting the remaining fuel transactions permitted with the Latin American country. The step could target crude swaps with companies in Europe and Asia. The sanctions have not been finalized and talks are ongoing. The United States has debated the move for months, and initially prioritized actions against Iran, which started exporting gasoline to Venezuela. The United States said on Aug.14 it had confiscated four Iranian fuel shipments that had been bound for Venezuela, disrupting a key supply line for both Tehran and Caracas as they defied U.S. sanctions.
We expect bunker prices may demonstrate slight upward changes today: 1-3 USD up for IFO and 3-5 USD up for MGO.