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2020-10-05

Bunker Market this morning 5th October, 2020.

Last Friday market close

Oil loses 4% after Trump gets coronavirus and economies wobble.

Oil prices fell more than 4% on Friday, and posted a second weekly decline after U.S. President Donald Trump tested positive for COVID-19, roiling risky assets, and as rising global crude output threatened to overwhelm the market’s weak recovery.

Benchmark Brent and U.S. crude each posted a second straight week of losses. The uncertainty surrounding the U.S. president’s health added to a series of jitters, including a lackluster U.S. unemployment report and increased supply from major world oil producers.

“It’s been a rough week, and now the president’s diagnosis sends a shudder through markets,” said John Kilduff, partner at Again Capital in New York. “The COVID-19 pandemic has weighed more on the oil market than any other asset class.”

This week marked the grim milestone of 1 million deaths and several countries are tightening restrictions and contemplating lockdowns as infections accelerate.

Brent crude was down $1.66, or 4.1%, at $39.27 a barrel. Brent was down 7% on the week. U.S. oil settled down $1.67, or 4.3% at $37.05 a barrel, an 8% drop on the week. Both benchmarks were down for a second consecutive week.

The U.S. labor market recovery slowed in September, as non-farm payrolls increased by 661,000 jobs last month after advancing 1.49 million in August, the U.S. Labor Department said.

Increasing supply also weighed on the market. U.S. energy firms added oil and natural gas rigs in the latest week, according to energy services firm Baker Hughes Co, a signal of more supply to come. The increase was the third in a row, and came as price increases in recent months prompted some producers to start drilling again. [RIG/U]

Crude supplies from the Organization of the Petroleum Exporting Countries (OPEC) rose in September by 160,000 barrels per day (bpd) from a month earlier, a Reuters survey showed.

Today Monday Market opens

Oil prices claw back 2% after upbeat signals from Trump doctors.

Oil prices rose about 2% on Monday, lifted by comments from doctors for U.S. President Donald Trump suggesting he could be discharged from hospital as soon as Monday, just a few days after his positive test for COVID-19 sparked widespread alarm.

Trump’s health update eased political uncertainty in global markets, pushing Brent up to $39.96 a barrel by 0232 GMT, gaining 69 cents or 1.8%. U.S. West Texas Intermediate (WTI) crude was at $37.81 a barrel, up 76 cents, or 2.1%.

Prices had slumped more than 4% on Friday amid uncertainty surrounding Trump’s health, adding to concern that rising coronavirus case numbers that could dampen global economic recovery.

But analysts said Monday’s rebound was driven by an easing of the worst fears about Trump’s health condition, albeit clouded by some mixed signals.

“I think it’s the improving health of the U.S. President ... over the weekend there were a lot of conflicting reports on his health, but generally he’s improving,” said Avtar Sandu, senior commodities manager at Phillip Futures.

“He could be back to work soon,” Sandu said, adding that investors were worried about the stalled U.S. fiscal stimulus plan which could aid oil demand recovery.

Prices were also supported by an expanding workers’ strike in Norway on Monday that could reduce the country’s production capacity by as much as 330,000 barrels of oil equivalent per day (boepd) or 8% of its total output, according to the Norwegian Oil and Gas Association.

These offset indications of rising oil supply in the market.

Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), has seen a near three-fold rise in its output which hit 270,000 barrels per day last week after eastern forces eased a blockade on the country’s oil infrastructure.

“That very fragile supply deficit that we have looks like it’s going to be gone if Libya does produce an extra half a million (bpd) more alone,” OCBC’s economist Howie Lee said, adding it could delay drawdowns in excess inventory supplies.

Meanwhile recent price increases have prompted some U.S. producers to resume drilling. U.S. energy firms this week added oil and natural gas rigs for a third week in a row for the first time since October 2018, data from Baker Hughes showed on Friday.

But the rise in supplies comes at a time when China’s crude imports are slowing, which could depress Brent to $41 a barrel in fourth quarter, JP Morgan analysts said in an Oct. 2 note, leaving OPEC and its allies, including Russia, to face another decision on supply cuts in November.

Oil Future close 2nd October, 2020

Brent crude: $ 39.27 (-1.66) /brl FM delivery Dec (FM=Front Month)

Light crude (WTI): $ 37.05 (-1.67) /brl FM delivery Nov

Gasoil ARA; $ 314.75 (-2.25) /mton FM delivery Oct

NY Harbor Ulsd: $ 334.03 (-12.31) /mton FM delivery Nov

Oil Futures trading at GMT 04.52; Brent: $+0.81, WTI: $+0.91

Expect bunker prices for Fuel Oil to drop 10-13 usd/mton. MGO slightly down by 2 usd/mton and NY Harbor down by 12 usd/mton.

Expect oil prices to be unstable throughout day all depending on the health of the US President.

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