MABUX: Bunker market this evening, Feb.09.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO (Gasoil) in the main world hubs) continued downward evolution on Feb.09:
380 HSFO - USD/ 352.36(-5.35)
180 HSFO - USD/MT 391.93(-3.14)
MGO - USD/MT 611.29(-3.42)
World oil indexes in turn also continued decline on Feb.09 as record-high U.S. crude output added to concerns about a sharp rise in global supplies.
Brent for April settlement lost $2.02 to $62.79 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March decreased by $1.95 to $59.20 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.59 to WTI. Gasoil for February went down by $15.75.
The budget deal that the U.S. Congress reached on Feb.07 includes the sale of 100 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) between 2022 and 2027-a total volume equal to some 15 percent of the current reserve. 30 million barrels of the SPR are to be sold between 2022 and 2025, another 35 million barrels in 2026, and additional 35 million barrels in 2027 to help fund the government. The budget deal also involves the sale of $350 million worth of crude oil, or some 5.7 million barrels, this year, with proceeds to be used to repair storage units at the reserve. Currently, the SPR has around 665.1 million barrels of crude oil stored in underground caverns on the coasts of Texas and Louisiana.
Venezuela’s production continues to decline, falling to about 1.6-1.7 million barrels per day (bpd) in December. On an annual basis, Barclays predicts that Venezuela’s output will fall sharply from 2.18 million bpd in 2017 to just 1.43 million bpd this year, a decline of roughly 700,000 bpd. The steep declines will increasingly be felt worldwide given that oil demand is growing briskly and the OPEC/non-OPEC coalition continues to keep 1.8 million bpd of supply off of the market.
Сrude oil imports to China hit another record last month, reaching 9.57 million barrels daily, for a total of 40.64 million tons, customs data showed. This is 400,000 bpd more than the previous record from March last year. A Rosneft pipeline began operating at an expanded capacity on January 1, which increased the flows of crude into the country. Besides, the increase in oil imports was driven by independent refiners, who rushed to utilize their higher crude oil quotas, that were 55 percent higher than last year’s. It forecasts that Chinese crude oil imports will continue to grow over the next few years as the use of oil products grow along with the economic and refinery capacity expansion. The country’s import dependence is also expected to grow as imports rise and production declines.
China plans to launch its long-awaited crude oil futures contract on March 26: a move that will potentially shake up pricing of the world’s largest commodity market. The launch will mark the end of a years-long push by China to create Asia’s first oil futures benchmark, and is aimed at giving the world’s biggest oil consumer more clout in pricing crude in Asia. The creation of the yuan-denominated contract was originally expected about six years ago, but has run into delays as turmoil in China’s stock markets and other commodity futures raised concerns about its capacity to handle financial turbulence.
We expect bunker prices may start next week with further decline.