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MABUX: Bunker market this morning, Nov.06.

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) continued slight upward trend on Nov.05:

380 HSFO - USD/MT - 296.50 (+3.11)

VLSFO - USD/MT – 345.00 (+6.00)

MGO - USD/MT – 404.89 (+1.62)

Meantime, world oil indexes declined slightly on Nov.05 with attention turning back to the ongoing rise in COVID-19 cases around the world, underlining worries about energy demand as economies slow.

Brent for January settlement decreased by $0.30 to $40.93 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery fell by $0.36 to $38.79 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.14 to WTI. Gasoil for November delivery lost $0.50 – $327.00.

Today morning oil indexes continue firm downward trend.

Democrat Joe Biden moved closer to victory in the U.S. presidential race as election officials tallied votes in the handful of states that will determine the outcome and protesters took to the streets. Incumbent President Donald Trump alleged fraud, filed lawsuits and called for recounts in a race yet to be decided two days after polls closed. With tensions rising, Trump's supporters gathered outside some election offices, following rumors that votes were not being counted. Anti-Trump protesters in other cities demanded that vote counting continue. Supporters of both candidates expressed anger, frustration and fear with little clarity on when the election would be resolved. The uncertainty in vote results sets up the potential upward driver for fuel indexes.

Besides, current vote counting and trends suggest the Republicans are poised to retain control of the U.S. Senate, while the Democrats will hold a slimmed majority in the House of Representatives. A divided Congress could hamper Biden’s plans on climate change, economic stimulus and the easing of sanctions on oil producer Iran.

Italy posted its highest one day of infections on Nov.05, while the United States surpassed 100,000 infections in a day last week, a record. The Bank of England increased its bond-buying stimulus as it prepared for economic damage from new coronavirus lockdowns and the looming risk of Brexit. The bank said Britain’s economy was set to shrink a record 11% over the course of 2020 overall.

Saudi Arabia cut most oil pricing for its Asia buyers as a resurgence in the coronavirus clouds the outlook for energy demand. State oil producer Saudi Aramco decreased pricing for December shipments of Arab Light crude for Asia, its largest regional market, by 10 cents a barrel to a 50-cent discount to the benchmark. Aramco had been expected to make only slight changes in monthly pricing for the grade. Meantime, Aramco cut all December crude pricing to the U.S. and raised all prices for the month to northwest Europe and the Mediterranean region.

China’s crude oil imports have fallen in recent months from their record high of nearly 13 million barrels per day (bpd) in June, although imports continue to be considerably higher compared to last year’s monthly levels. Having hit an all-time high in June, Chinese crude oil imports have declined over two consecutive months by 1.77 million bpd to 11.21 million bpd in August. It is expected that Chinese imports will not be as strong in the fourth quarter, as storage space fills up and demand for fuels in the regions it exports them to remains weak. In any case, China, will continue to have a significant impact on the oil and fuel markets in the coming months, as most of the rest of the world continues to battle a second coronavirus wave that has stalled the already fragile global oil demand recovery.

Asian refiners’ profit from producing very low sulphur fuel oil (VLSFO) climbed to six-month highs this week as output cuts keep supplies tight while demand for the shipping fuel at most ports are back at pre-pandemic levels. The trend is likely to stay for the rest of the year, encouraging Asian refiners to prioritise VLSFO production along with petrochemical feedstock naphtha, where demand has also firmed. Unlike other refined fuels such as gasoline, gasoil and jet fuel, residue fuel demand in shipping and power generation has been relatively stable.

The Philippines could begin exploring for oil and gas in the disputed South China Sea even without a Chinese partner. Last month, the Philippines lifted a moratorium on oil and gas exploration in the South China Sea. The moratorium was imposed when the Philippines took China to court over the long-running dispute over territorial water claims in the South China Sea. A court in The Hague in 2016 ruled against China’s claims and in favor of the Philippines. China, however, has not acknowledged the ruling, which has heightened tensions in the area.

We expect IFO bunker prices may fall by 1-3 USD today while MGO prices may lose 1-4 USD. Forecast for today: downward trend.