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MABUX: Bunker market this morning, Dec.21, 2020

Monday, 21 December 2020 | 13:00

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.18:

380 HSFO – USD/MT – 341.46 (+0.67)
VLSFO – USD/MT – 421.00 (+1.00)
MGO – USD/MT – 487.63 (+2.18)

Correlation of the MBP Index (Market Bunker Prices) vs the DBP Index (Digital Bunker Prices) in four largest hubs showed on Dec.18, that 380 HSFO was still undervalued in Rotterdam by 8 USD while remaining overpriced in Singapore, Fujairah and Houston (plus 2 USD, 8 USD and 22 USD, respectively). VLSFO fuel remains moderately overpriced in all selected ports except of Singapore, where VLSFO was undervalued by 4 USD. MGO LS, in turn, was undervalued in all ports ranging from minus 17 USD to minus 46 USD, with the exception of Houston (was overcharged by 8 USD).

World oil indexes demonstrated slight upward evolution on Dec.18 as market focused on the rollout of COVID-19 vaccines.

Brent for February settlement rose by $0.76 to $52.26 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for January delivery increased by $0.74 to $49.10 a barrel on the New York Mercantile Exchange. The Brent benchmark traded at the premium of $3.16 to WTI. Gasoil for January delivery gained $6.75 – $433.50.

Today morning oil indexes have turned into downward correction.

Pfizer has applied for approval in Japan for its vaccine, which is being used in the United Kingdom and the United States. The U.S. Food and Drug Administration is also working towards approving Moderna's shot. While the vaccines offer hope, surging case numbers in major economies and new movement restrictions in Europe are impacting the immediate prospects for oil and fuel demand.

Rystad Energy reported U.S. onshore oil production from companies that filed for bankruptcy in the last two years is set to decrease by about 25% by the end of 2021, or by about 200,000 barrels per day (bpd) compared to current output levels. The loss puts the projected nationwide production growth for 2021 at risk of being offset.

Russian President Vladimir Putin claimed Russia is successfully weaning itself off oil revenues. Russia’s oil and gas exports account for 60 percent of total exports, and revenues from the oil and gas represent about 30 percent of GDP. While the number is a lot lower than the portion of oil revenues in GDP of most of the world other large oil exporters, it still makes up quite a large portion of budget revenues.

The oil and gas rig count, an early indicator of future output, rose by eight to 346 in the week to Dec. 18, the highest since May, as producers keep returning to the wellpad with crude prices trading above $45 a barrel since late November.

We expect IFO bunker prices may add 3-5 USD today while MGO prices may gain 4-6 USD.
Source: MABUX

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