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2020-11-18

MABUX: Bunker Market this morning 18th November, 2020

Oil prices edged lower in post-settlement trade on Tuesday after an industry group reported a bigger build than expected in U.S. crude stockpiles, adding to worries that new coronavirus lockdowns could hit demand.

During the session, prices were narrowly mixed as the demand fears offset hopes for a vaccine and talk of tighter OPEC+ supply policies. Brent future fell 7 cents, or 0.2%, to settle at $43.75 a barrel. U.S. crude gained 9 cents, or 0.2%, to settle at $41.43.

After settlement, U.S. crude edged lower to $41.19 a barrel when industry group the American Petroleum Institute (API) said crude inventories rose more 4.174 million barrels last week. That far exceeded the forecast increase of 1.7 million barrels, according to a Reuters poll.

Crude prices had pared losses ahead of settlement, after the Pentagon said President Donald Trump will sharply reduce U.S. forces in Afghanistan from 4,500 to 2,500.

“Crude prices rallied (from negative to little changed) after the Trump administration announced further drawdown of troops in Afghanistan and Iraq,” said Edward Moya, senior market analyst at OANDA in New York, noting instability in the region is a growing concern for some top military advisers and the oil market.

The short-term economic outlook remained hazy with several European nations tightening restrictions as coronavirus cases increase.

To tackle weaker energy demand in a resurgent pandemic, Saudi Arabia called on fellow OPEC+ members to be flexible as it builds the case for a tighter production policy in 2021.

OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, lowered its outlook on oil demand growth for 2021, according to a confidential document seen by Reuters.

An option gaining support among OPEC+ nations is to keep the existing cuts of 7.7 million barrels per day (bpd) for a further three to six months, sources said, rather than tapering the reduction to 5.7 million bpd in January.

OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation. The group will hold a full meeting on Nov. 30-Dec. 1.

Oil prices were mixed on Wednesday as a bigger-than-expected build in U.S. crude stocks and weaker U.S. retail sales stoked fears over fuel demand, although hopes that OPEC and its allies will delay a planned rise in oil output lent support.

“The API crude inventories rose much higher than expected, which added to pressure,” said Jeffrey Halley, senior market analyst at OANDA.

Disappointing U.S. retail sales also raised concerns over weaker U.S. consumption in light of the COVID-19 resurgence, he said.

U.S. retail sales increased less than expected in October, restrained by spiraling new COVID-19 infections and declining household income as millions of unemployed Americans lose government financial support.

“Still, I think today is the day of consolidation ... investors just saw an excuse for unwinding their long positions,” Halley said.

It is predicted WTI will stay boxed into a range of $39 to $44 a barrel until a full meeting of the Organization of the Petroleum Exporting Countries (OPEC) later this month.

OPEC+ members are leaning towards delaying a previously agreed plan to boost output in January by 2 million barrels per day (bpd), or 2% of global demand, sources told Reuters early this week.

Supporting the case for a tighter supply policy next year, OPEC and its allies have revised oil demand scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters shows.

Oil Future close 17th November, 2020

Brent crude: $ 43.75 (-0.07) /brl FM delivery Jan (FM=Front Month)

Light crude (WTI): $ 41.43 (+0.09) /brl FM delivery Dec

Gasoil ARA; $ 350.25 (-2.50) /mton FM delivery Dec

NY Harbor Ulsd: $ 381.47 (+3.14) /mton FM delivery Dec

Oil Futures trading at GMT 07.13; Brent: $-0.07, WTI: $-0.14.

Expect Fuel Oil prices little change today.

(Fuel Oil, means 380 HS plus VLSFO together).

MGO and NY Harbor Ulsd also expected little change.

All prices are based on Oil Future close last night Tuesday evening.

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