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MABUX: Bunker market this morning, Feb.19, 2021

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO in the main world hubs) continued firm upward evolution on Feb.18:

380 HSFO - USD/MT – 406.63 (+2.64)

VLSFO - USD/MT – 509.70 (+2.19)

MGO - USD/MT – 566.52 (+4.26)

As of Feb. 18, a correlation of MBP Index (Market Bunker Prices) vs DBP Index (MABUX Digital Benchmark (Digital Bunker Prices)) in four largest global hubs showed 380 HSFO and MGO LS fuels remain consistently undervalued in all selected ports. According to DBP Index, the 380 HSFO was undercharged from minus $ 11 (Houston) to minus $ 22 (Rotterdam), MGO LS - from minus $ 5 (Houston) to minus $ 33 (Singapore). Taking into consideration rather stable upward evolution of bunker indexes at the moment, the underepricing of 380 HSFO and MGO will persist in the short-term outlook. VLSFO, on the contrary, remains slightly overvalued in all selected ports in the range from plus $ 1 (Singapore) to plus $ 12 (Houston).

World oil indexes changed irregular on Feb.18 as concerns that a rare cold snap in Texas could disrupt U.S. crude output for days or even weeks prompted fresh buying.

Brent for April settlement fell by $0.41 to $63.93 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March delivery decreased by $0.62 to $60.52 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.41 to WTI. Gasoil for March delivery gained $7.50 – $526.75.

Today morning oil indexes have turned into slight downward correction.

Texas’ freeze entered a sixth day on Feb.18, as the largest energy-producing state in the United States grappled with massive refining outages and oil and gas shut-ins that rippled beyond its borders into neighbouring Mexico. About 4 million barrels of daily refining capacity has been shuttered and at least 1 million barrels per day of oil production is also out.

Oil’s rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ grouping that includes Russia. OPEC+ sources said the group’s producers are likely to ease curbs on supply after April given the recovery in prices.

Prices also gained support from a larger-than-anticipated draw in the U.S. crude oil inventories. The Energy Information Administration reported crude oil inventories in the U.S. had shed 7.3 million barrels in the week to February 12. Analysts had expected an inventory draw of 2.175 million barrels for the reporting period.

We expect bunker prices not have any firm trend today and change irregular: IFO – in a range of plus-minus 0-3 USD, MGO – in a range of plus-minus 0-6 USD.