MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) rose slightly on Aug.25:
380 HSFO – USD/MT – 310.85 (+1.27)
VLSFO – USD/MT – 363.00 (+2.00)
MGO – USD/MT – 444.58 (+3.94)
Meantime, world oil indexes rose on Aug.25 supported by production cuts in the U.S. Gulf Coast as Tropical Storm Laura was forecast to become a major hurricane, while rising coronavirus cases in Asia and Europe capped gains.
Brent for October settlement increased by $0.73 to $45.86 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for October delivery rose by $0.73 to $43.35 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.51 to WTI. Gasoil for September delivery gained $7.75 – $378.50.
This morning, global oil indexes do not have any firm trend so far and change irregular.
Energy companies moved to cut production at U.S. Gulf Coast oil refineries after shutting 82% of the area’s offshore crude oil output as the rare double-storm assault on key U.S. oil regions threatens to bring days of heavy rains and strong winds this week. Producers have shut more than 1.5 million barrels per day of Gulf Coast offshore oil production, nearly 14% of the nation’s total output. In addition, roughly 281 platforms, nearly 44% of the Gulf’s total, had been evacuated as Tropical Depression Marco and Tropical Storm Laura moved closer to the Gulf Coast. Also, six rigs, or 60% of the total in the region, had been evacuated. However, the risk of a major double hit has lessened. Storm Laura was still expected to become a major hurricane but storm Marco has weakened.
A top U.S. infectious diseases expert warned that rushing out vaccines could undermine trials of other promising candidates, following a boost to markets after U.S. regulators authorised the use of blood plasma from recovered COVID-19 patients as a treatment option. Europe is also seeing a rise in coronavirus cases while the first documented case of human re-infection with COVID-19 was reported with a man in Hong Kong catching the virus again some four months after first being infected.
Over the next few months, crude prices could come under further pressure because the oil supply is also set to increase from the United States, where producers are restoring shale production. As per a Rystad Energy, most U.S. operators are set to restore nearly all shut-in oil volumes by the end of the third quarter, with only a handful maintaining some level of curtailment for the rest of the year. Last week, the oil rig count in the United States saw its largest weekly increase since January, with most of the rigs added in the Permian Basin. This could be the sign that U.S. oil production is beginning a slow recovery.
Venezuela’s December 2020 National Assembly elections are fast approaching. The U.S. appears to have lost the ability to spark regime change in Venezuela. Harsher sanctions and the Latin American country’s growing forced austerity has seen a hard-pressed Maduro seek closer ties with Russia, giving Moscow ever greater control of Venezuela’s vast oil reserves and potential productive capacity. This not only boosts Russian geopolitical standing but gives Moscow greater ability to influence oil prices by increasing its bargaining power with OPEC, with which Russia has partnered since 2016 in a series of petroleum production cuts to bolster prices.
The spot price of liquefied natural gas for delivery to north Asia has more than doubled since hitting an all-time low earlier this year. The spot price LNG-AS ended last week at $4.10 per million British thermal units (mmBtu), its highest since mid-January and 122% above the record low of $1.85 touched in separate weeks at the beginning and end of May. However, the recovery in spot prices may not be driven mainly by improving demand, rather it may be linked to rising prices of natural gas in the United States and Europe due to a hotter than usual summer boosting air-conditioning demand for electricity.
The American Petroleum Institute (API) reported on Aug.25 a draw in crude oil inventories of 4.524 million barrels for the week ending Aug. 21. Forecasts had predicted an inventory draw of 3.694-million barrels. In the previous week, the API reported a draw in crude oil inventories of 4.264 million barrels, after analysts had predicted a draw of 2.670 million barrels.
We expect IFO bunker prices may rise today by 2-4 USD, MGO prices may add 4-7 USD.