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2020-05-18

MABUX: Bunker market this morning, May, 18.

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs increased on May, 15:

380 HSFO - USD/MT - 235.51 (+6.00)

VLSFO - USD/MT – 269.00 (+9.00)

MGO - USD/MT – 324.52 (+6.32)

Meantime, world oil indexes also rose on May, 15 pushed up by signs of consumption recovering just as the major producers cut back on output.

Brent for July settlement increased by $1.37 to $32.50 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for June rose by $1.87 to $29.43 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.07 to WTI. Gasoil for June delivery added by $14.50.

Today morning oil indexes continue to rise supported by ongoing output cuts and signs of gradual recovery in fuel demand as more countries ease curbs imposed to stop the coronavirus pandemic spreading.

The June WTI contract expires tomorrow, but there was little sign of WTI repeating the historic plunge below zero seen last month on the eve of the May contract's expiry amid signs that demand for crude and derived fuels is recovering from its lowest level.

The prospects of a modest but sustained oil price recovery in the coming months are growing as output curbs and a demand rebound from coronavirus lockdowns easing drains the world’s oil surplus faster than expected. On the demand side, signs that the global oil market is rebalancing ahead of expectations are being led by data showing fuel demand is recovering steadily after bottoming out in April when some lockdowns began to be lifted.

China’s daily crude oil throughput rebounded in April from a 15-month low in March as refiners cranked up operations to meet renewed The data from the National Bureau of Statistics (NBS) showed May,15, that the country processed a total of 53.85 million tonnes of crude oil last month, equivalent to about 13.1 million barrels per day (bpd). That was some 11% higher than 11.78 million bpd in March. The industrial production increased by 3.9% in April from a year ago, that proves the improving from the coronavirus hit.

The upward move also follows on from the International Energy Agency boosting its demand forecast for 2020 by 700,000 barrels a day on May,14, saying that the outlook for global oil markets has “improved somewhat.”

At the same time, major producers have scaled back production sharply in the wake of the historic decision of OPEC and its allies, commonly known as OPEC+, to cut output by 9.7 million barrels a day for May and June.

Data from the Energy Information Administration last week showed U.S. crude production dropped for a sixth straight week to the lowest in nearly a year, suggesting that the demand/supply balance is moving nearer to equilibrium and thus reducing the chance of negative prices at the next futures contract expiry.

Baker Hughes on May,15 reported that the number of active U.S. rigs drilling for oil dropped by 34 to 258 last week. The oil-rig count has now fallen for nine weeks in a row, implying upcoming declines in domestic crude output. The total active U.S. rig count, meanwhile, also fell by 35 to 339.

Goldman Sachs on My,14 raised its May global oil demand estimate by 1.4 million b/d, citing a better than expected improvement in gasoline demand in key markets such as the US, China and Germany. Despite a faster than expected recovery in demand and steep output cuts by OPEC+ and US shale producers, oil price gains could remain limited in the near term due to huge global oil stock overhang and the potential for price-sensitive US shale producers to restart wells quickly.

OPEC member Nigeria has reined in oil production to bring Africa’s top crude exporter into line with an agreement among producers to curb output. The cut for Nigeria is about 417,000 barrels per day (bpd), which is about 23% of country’s production. Under the deal, Nigeria should cap production at 1.41 million bpd in May and June.

We expect bunker prices may demonstrate upward changes today: 5-8 USD up for IFO, 10-14 USD up for MGO.

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