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Bunker Global Open Directory News

2020-05-12

MABUX: Bunker market this morning, May, 12.

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 changes on May, 11:

380 HSFO - USD/MT - 228.75 (+0.77)

VLSFO - USD/MT – 264.00 (+4.00)

MGO - USD/MT – 327.36 (+1.69)

Meantime, world oil indexes declined on May, 11 amid worries about a second wave of coronavirus infections, but new output cuts from Saudi Arabia tempered worries about oversupply and limited price losses.

Brent for July settlement decreased by $1.34 to $29.63 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June declined by $0.60 to $24.14 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $5.49 to WTI. Gasoil for May delivery fell by $2.25.

Today morning oil indexes increase supported by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.

Saudi Arabia said it would cut oil production by an additional 1 million barrels per day (bpd) on top of its promised cuts as part of the OPEC+ production cut deal. Under the OPEC+ deal in effect from May 1, Saudi Arabia has pledged to cut its oil production to 8.5 million bpd. With the voluntary additional reduction in June, the Saudis would produce 7.492 million bpd next month. The energy ministry is also ordering Aramco to seek further cuts to its targeted production of 8.492 million bpd for May, after consultations with its customers.

At the same time there are fears in the market, that the eased lockdowns could lead to a second wave of COVID-19 cases, as some data in China, South Korea, and Germany could suggest. The U.S. White House is suffering a mini-outbreak of Covid-19 with Vice President Mike Pence’s Press Secretary Katie Miller testing positive, while Anthony Fauci and Robert Reid, two other senior health officials on the coronavirus task force, are on self-quarantine. Pence and President Donald Trump have tested negative so far. Both China and South Korea reported new spikes in coronavirus cases, with Seoul recording 34 new cases, its biggest single-day jump in about a month. In Germany, the closely-watched reproduction rate Covid-19 had climbed to 1.1, meaning 10 people with the virus could infect on average 11 others.

Iran has declared quarantine on Abadan County, an oil-rich region in southwestern Iran, after it booked an increase in new Covid-19 cases last week. Iran has been among the countries hardest hit by the coronavirus pandemic. What’s worse is that the increase in new cases comes after a national decline in new cases that prompted a relaxation of some lockdown measures. The country has recorded more than 107 thousand cases, with 6,640 deaths on May, 11.

Earlier this month medical officials reported, that the number of new infections was rising across Iran’s oil heartland, Khuzestan province, of which the Abadan County is part. Despite the pandemic, however, Iran is still building a major new pipeline that would transport oil and oil products from Khuzestan to the coast on the Gulf of Oman. The Guriyeh-Jask pipeline will have a capacity of at least a million barrels of crude or petrochemicals. It would allow Iran to boost its oil exports significantly while retaining the ability to disrupt oil flows through the Strait of Hormuz.

Crude inventories in China, the globe’s biggest importer, have shrunk in recent weeks after rising to record levels, and is an early sign that rebalancing may have begun in the global oil market. This comes after the latest data from the Energy Information Administration showed the slowest weekly build since mid-March as domestic output fell further.

We expect bunker prices may demonstrate slight downward changes today: 3-6 USD down for IFO, 1-3 USD down for MGO.

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