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MABUX: Bunker market this morning, Dec.23, 2020

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO in the main world hubs) rose slightly on Dec.22:

380 HSFO - USD/MT - 337.64 (-1.92)

VLSFO - USD/MT – 418.00 (-2.00)

MGO - USD/MT – 482.07 (-1.51)

Correlation of the MBP Index (Market Bunker Prices) vs the DBP Index (Digital Bunker Prices) in four largest hubs showed on Dec.22, that 380 HSFO was still undervalued in Rotterdam by 9 USD and in Singapore by 5 USD, while remaining overpriced in Fujairah and Houston (plus 4 USD and 16 USD, respectively). VLSFO fuel remains moderately overpriced in all selected ports except of Singapore, where VLSFO was undervalued by 5 USD. MGO LS, in turn, was undervalued in all ports ranging from minus 17 USD to minus 40 USD, with the exception of Houston (was overcharged by 23 USD).

World oil indexes demonstrated irregular changes on Dec.22 as a new strain of the novel coronavirus in the United Kingdom triggered concerns over fuel demand recovery.

Brent for February settlement declined by $0.83 to $50.08 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for February delivery decreased by $0.95 to $47.02 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.06 to WTI. Gasoil for January delivery gained $3.75 – $418.00.

Today morning oil indexes continue moderate downward trend.

After the UK government warned that a new variant of the virus seemed to be spreading much faster than previous kinds, India, Pakistan, Russia, Jordan and Hong Kong joined European countries in suspending travel from Britain, and Saudi Arabia, Kuwait and Oman closed their borders completely.

OPEC+ will take a more hands-on approach to global oil markets now that it plans to meet more frequently. The denser meeting schedule will also help OPEC+ get the upperhand in directing oil markets over speculators. Earlier this month, OPEC+ members agreed to start raising their combined oil production by half a million barrels daily from next month, to continue until April. This decision was widely seen as a compromise between the more aggressive backers of further deep cuts such as Saudi Arabia and those eager to restart production growth such as Iraq and Russia.

Capital Economics said the OPEC+ agreement earlier this month to increase oil supply will mean that downturns in hydrocarbon sectors across the GCC states will start to ease, so Brent crude will reach $60 per barrel by the end of next year and the Gulf economies will start to benefit from higher prices.

The American Petroleum Institute (API) reported on Dtc.22 a build in crude oil inventories of 2.70 million barrels for the week ending December 18. Forecasts had predicted an inventory draw of 3.135 million barrels for the week. U.S. oil production fell to 11.0 million bpd for the week ending December 11 — 2.1 million bpd lower than the all-time high of 13.1 million bpd reached in March.

We expect IFO bunker prices may fall by 3-6 USD today while MGO prices may change irregular in a range of plus-minus 2-4 USD.