MABUX: Bunker market this morning, Dec 16

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO Gasoil) in the main world hubs) slightly increased on Dec.15:

380 HSFO: USD/MT 336.07 (+0.77)
VLSFO: USD/MT 415.00 (+1.00)
MGO: USD/MT 477.96 (+2.32)

Correlation between the Market Bunker Price Index (MBP) vs MABUX Digital Bunker Price Index (DBP) in four major hubs on Dec.15 still showed overcharging of VLSFO bunker grades in all selected ports. At the same time, 380 HSFO is overcharged in all ports except of Rotterdam (-7 USD). MGO LS remained undervalued in all ports except of Houston (+ 12 USD).

Meantime, world oil indexes increased on Dec.15 shrugging off another small downgrade to the global demand outlook on concentrating on positioning for an expected rally in 2021.

Brent for February settlement increased by $0.32 to $50.76 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January rose by $0.63 to $47.62 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.14 to WTI. Gasoil for January delivery added $9.25.

Today oil indexes decline amid another week of builds of U.S. crude oil inventories.

Crude oil supply data from the American Petroleum Institute (API) showed a 1.973-million-barrel build for the last week. It was a bigger gain than the 3.5-million-barrel draw in forecasts and the 1.141-million-barrel build reported for the previous week. The market now awaits crude oil inventory data from the U.S. Energy Information Administration, due to be released later in the day.

At the same time, there is a pressure from number of new restrictions due to COVID-19 situation in Europe. London stepped up pandemic restrictions requiring bars and restaurants to close, Italy is considering more stringent steps over Christmas and Germany is likely to be under lockdown until early 2021.

The International Energy Agency (IEA) shaved its estimate for global demand next year by another 170,000 barrels a day, leaving it still more than 3 million barrels a day below 2019 levels. The shortfall in overall demand comes mainly from kerosene, or jet fuel. The IEA said this would account for four-fifths of the estimated shortfall in demand next year, as air transport takes considerably longer to recover than travel by road.

There was noted repeatedly during the latest surge in Coronavirus cases in Europe and the U.S. that strong demand for diesel has offset weaker demand for gasoline, thanks to a big increase in demand from freight companies whose deliveries are replacing car-driven trips to shopping malls.

The Agency (IEA) also said that any vaccine impact on demand for fuel is several months away. Global tanks will hold 625 million barrels more crude at the start of 2021 compared with pre-pandemic levels, an overhang that will dissipate by next December.

At the same time, OPEC forecasted, that oil demand will rise more slowly than expected in 2021. OPEC cut its demand forecast for Q1 2021, as Covid-19’s rampage through the U.S. and Europe threatens demand in the near-term. The group and its allies, known as OPEC+, also delayed meetings planned for this week until early January.

We expect bunker prices may demonstrate slight upward changes today: 1-3 USD up for IFO and 6-9 USD up for MGO.

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Tags: Bunker market