MABUX: Bunker market this morning, Feb 11, 2021

IFO bunker prices may rise $1-3 today while MGO prices will gain $2-4

The Bunker Review was contributed by Marine Bunker Exchange (MABUX)

MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO in the main world hubs) showed firm upward evolution on February 10:

380 HSFO: USD/MT – 386.77 (+1.85)
VLSFO: USD/MT – 495.40 (+3.03)
MGO: USD/MT – 547.99 (+0.79)

As of February 10, a correlation of MBP Index (Market Bunker Prices) vs DBP Index (MABUX Digital Benchmark (Digital Bunker Prices)) in four largest global hubs showed that there is still the situation on the market where 380 HSFO and MGO LS grades remain undercharged in all selected ports. According to DBP Index, the 380 HSFO is underestimated in a range from minus $ 9 (Fujairah) to minus $ 14 (Houston), MGO LS is also underestimated from minus $ 5 (Houston) to minus 27 (Singapore). DBP Index also registered VLSFO as the only fuel which remains overvalued in all selected ports: an overcharging ranged from plus $ 3 (Houston) to plus $ 16 (Singapore).

World oil indexes rose on February 10, supported by producer supply cuts and hopes that vaccine rollouts will drive a recovery in demand.

Brent for April settlement rose by $0.38 to $61.47 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March delivery increased by $0.32 to $58.68 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $2.79 to WTI. Gasoil for February delivery added $4.75 – $501.00.

Today morning oil indexes have turned into slight downward correction.

Brent has now risen for nine sessions in a row, its longest sustained period of gains since December 2018 to January 2019. It looks like fuel indexes have moved too far ahead of the underlying fundamentals. Some forecasts also predict that supply will undershoot demand in 2021 as more people get vaccinated and start going away on trips and working in offices.

The U.S. Energy Information Administration reported a crude oil inventory draw of 6.6 million barrels for the week to February 5. Gasoline and middle distillate inventories were mixed again. The report came a day after the American Petroleum Institute depressed oil traders by reporting a sizeable inventory build in gasoline, dashing hopes of a quick recovery in fuel demand. Analysts had expected the EIA to report a build in crude oil inventories, at 1.34 million barrels.

We expect IFO bunker prices may rise by 1-3 USD today while MGO prices will gain 2-4 USD.