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2020-11-10

MABUX: Bunker market this morning, Nov.10.

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) did not have any firm trend and changed irregular on Nov.09:

380 HSFO - USD/MT - 293.77 (-1.91)

VLSFO - USD/MT – 345.00 (+1.00)

MGO - USD/MT – 409.02 (+3.37)

Meantime, world oil indexes rose significantly on Nov.09 after Pfizer announced promising results for its COVID-19 vaccine candidate and Saudi Arabia said an OPEC+ oil output deal could be adjusted to balance the market.

Brent for January settlement rose by $2.95 to $42.40 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for December delivery added $3.15 to $40.29 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.11 to WTI. Gasoil for November delivery gained $21.00 – $343.75.

Today morning oil indexes turned into moderate downward correction.

Pfizer said its experimental vaccine was more than 90% effective in preventing COVID-19. It is expected, a vaccine will help ensure no future lockdowns are needed and will bring people back to the streets, allowing road and air transport to recover.

Saudi Arabia said the OPEC+ deal on oil output cuts could be adjusted if there was consensus among members of the group.

Meantime, key members of OPEC are wary that strains in the OPEC+ alliance could reemerge with Joe Biden as U.S. President and would miss President Donald Trump who went from criticising the group to helping bring about a record oil output cut. Biden could modify U.S. diplomatic relations with three members of OPEC – de facto leader Saudi Arabia, and sanctioned countries Iran and Venezuela, as well as with key non-OPEC producer Russia. Strict enforcement of U.S. sanctions on Iran and Venezuela has kept millions of barrels of oil per day off the market, and if Biden should relax measures on either in years to come an increase in production could make it harder for OPEC to balance supply with demand.

The International Energy Agency (IEA) said, renewed lockdown measures in Europe aimed at containing a rise in COVID-19 cases appear set to push the outlook for global oil demand toward the downside. The IEA kept its 2020 and 2021 oil demand forecast steady in its monthly report on Oct. 14, before major European countries including Germany, France and the United Kingdom imposed strict new curbs on movement to check the spread of the virus. IEA also noted that China remains the world's major bright spot after suppressing the virus earlier this year and is on track to be the only major country to boost its year-on-year demand for oil.

Libya boosted oil production to more than 1 million barrels a day. The country ramped up production in the past six weeks amid a truce between rival military forces. It was pumping 800,000 barrels a day last week, and now it was reported that that output exceeds the million-barrel level. That’s the first time the landmark has been reached since early January. The extra Libyan barrels are an unwelcome complication for OPEC+, which planned to increase output by almost 2 million barrels a day in January. But it may be forced into a delay with crude prices under pressure again.

India wants OPEC to review its pricing policies for the Asian market and end the premium it puts on its crude for Asia. India depends on OPEC for 78 percent of its crude oil demand, 59 percent of liquefied petroleum gas (LPG) demand, and nearly 38 percent of its liquefied natural gas (LNG) demand, and imported US$92.8 billion worth of oil, gas, and petroleum from OPEC members in the 2019-2020 financial year.

Diesel consumers are likely to face an uncomfortable fact: the capacity to refine crude oil into traditional diesel fuel is starting to shrink in the U.S. and ultimately the world. One of the reasons is that there is simply too much refining capacity in the world and there will be efforts needed to cull it. It is expected that worldwide refining capacity cuts to total about 5 million bpd, with about half of that coming from North America. Against a worldwide oil market of about 97 million bpd, down from the pre-pandemic level of 100 million bpd or slightly more, a cut that big is significant.

We expect IFO bunker prices may jump by 15-20 USD today while MGO prices will also gain 18-23 USD. Downward correction is expected in the end of the day.

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