• 2017 December 7 18:15

    MABUX Weekly Report: Rising oil production in the U.S. may pressure bunker prices

    The Bunker Review is contributed by Marine Bunker Exchange
     
    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) declined sharply in the period of Nov. 30 - Dec. 07:

    380 HSFO - down from 354.43 to 347.14 USD/MT (-7.29)
    180 HSFO - down from 396.93 to 388.50 USD/MT (-8.43)
    MGO        -down from 590.07 to 576.57 USD/MT (-13.50)

    OPEC and non-OPEC producers led by Russia agreed on Nov.30 to extend oil output cuts until the end of 2018. After this decision, the main drivers to influence bunker indexes are oil inventories and output levels in the U.S.

    OPEC also decided to cap the combined output of Nigeria and Libya at 2017 levels below 2.8 million bpd. Both countries have been exempt from cuts due to unrest and lower-than-normal production. There was also announced, that all parties would review the agreement at the next OPEC meeting in June. That seems to be a formality since the meetings are always a time and place at which OPEC assesses the situations on the oil market, but if the market tightens too much and prices rise significantly, Russia could push to end the agreement early. With oil prices rising above $60, Russia has more concerns that an extension for the whole of 2018 can prompt a rise in crude production in the United States, which is not participating in the deal. Another problem, that may arise, is to find more safety mechanism to finish the agreement not to let prices to fall. At the same time, Goldman Sachs boosted its oil price forecast following the OPEC meeting. It expects crude prices to gain 9 percent over the next year, but U.S. shale will still add new supply.   

    One of supporting factors today is that crude production from OPEC countries dropped again in November to a six-month low according to Bloomberg. Total production fell 80,000 barrels a day to 32.47 million a day last month. That was the lowest level since May, when output was 32.29 million. Much of the decline was the result of a 100,000-bpd decline from Angola, due to field maintenance.

    News from Nigeria also made a little support to the indexes. On November 29 residents of the Bayelsa region in Nigeria disrupted oil production at a field operated by Shell, shutting down two oil wells. Demonstrators demand power supply to their homes from the oil facility nearby.

    The pace of China’s oil imports growth is one of the most closely watched indicators on global fuel market. China is importing increasing volumes of oil not only because of demand growth, but also because its domestic oil production is declining as large ageing fields mature and as companies cut production from higher-cost fields amid the lower-for-longer oil prices. Therefore, Chinese dependence on crude oil imports is continuously rising and is set to further grow in the foreseeable future. As a result, China’s oil import reliance exceeded 65.6 percent in 2016 and is forecast to rise to 80 percent by 2030. By 2020, Chinese consumption of crude oil is expected at 12 million bpd.

    Moreover, Asian refiners are after U.S. crude oil as WTI continues to trade at a comfortable discount to Brent. Сrude oil shipments from the Gulf of Mexico and the Caribbean to China, Japan, South Korea, Singapore, and Taiwan jumped from about 500,000 bpd at the beginning of this year to over 1.2 million bpd. Data from Kpler showed earlier that in October, the amount of crude leaving U.S. ports averaged 1.6 million bpd, a lot of this bound for Asian refiners. Shipments of U.S. crude to Asia will likely continue to rise as production, especially in the shale patch, is increasing. This will eventually have a negative effect on prices.

    The Energy Information Administration reported a 5.6-million-barrel draw in crude oil inventories for the last week. Forecast expected a draw of 3.507 million barrels. But more notably, the EIA confirmed a large build of 6.8 million barrels in gasoline inventories. U.S. crude oil imports averaged 7.2 million barrels per day last week - a decrease of 127,000 barrels per day from the previous week. The EIA also said, refineries operated at 93.8 % of their operable capacity last week. Moreover, U.S. oil rig count rose again last week. The number of oil rigs operating in the US rose by 2 to 749 (versus 477 a year ago). Rising U.S. oil production may level OPEC's efforts in rebalancing the market and that prevents prices from rising much further.

    Meantime, researchers have discovered a flaw in the EIA’s official forecast, which might mean that the Agency is vastly overstating the potential growth of oil and gas production. In particular, the EIA has assumed technology has been behind much of the growth of shale, but the researchers said recent growth is more due to the fact that low prices have forced drillers to focus only on the most productive rigs. The conclusion is that total U.S. oil and natural gas production could undershoot EIA forecasts by 10 percent by 2020, a disparity that widens in subsequent years.

    The main risk at the market now is that the OPEC’s production cut extension, and as a result rising oil prices, may push U.S. output up. Meantime, both: OPEC and Russia don’t see global inventories falling back into the five-year average until the second half of 2018 - seasonally lower demand during winter months suggests that the destocking process will take a breather in the first quarter. In that case, real progress will not begin until probably the second quarter of 2018. At the same time, forecasts for the prices are quite optimistic. Oil market data from OPEC and International Energy Agency are due to issue next week and would define further trend.

    We expect bunker prices may demonstrate slight irregular changes next week.



     

     

     

     

     

     

     

    * MGO LS
    All prices stated in USD / Mton
    All time high Brent = $147.50 (July 11, 2008)
    All time high Light crude (WTI) = $147.27 (July 11, 2008)




2018 December 10

16:49 Throughput of port Riga (Latvia) in 11M’18 climbed by 6.5% Y-o-Y to 33.1 million tonnes
16:33 Konstantin Ponomarev appointed as head of RS Nuclear Ships Branch
16:10 Ship Recycling Transparency Initiative launches new online platform
15:58 MOL to participate in construction, ownership, operation of FSRU for Jawa 1 gas-fired IPP project in Indonesia
15:52 MOL LNG сarrier LNG Fukurokuju rescues castaway
15:26 Gasum consolidates its position as the leading Nordic LNG provider
14:58 NIBULON Shipbuilding and Repair Yard adds a new high-capacity German crane to its cranes
14:25 BIMCO publishes two 2020 sulphur clauses
14:00 Average wholesale prices for М-100 HFO down to RUB 16,794 in RF spot market
13:09 EU NAVFOR marks 10 years of operations
12:44 Pertti Korhonen to chair Traffic Management Finland BoD
12:07 Incheon Port container traffic increases by 10.4% in October 2018
11:51 Beginning of icebreaker assistance period announced at Big Port St. Petersburg
11:30 Cargo traffic in Volga Basin of Russia’s IWW in navigation season 2018 fell by 14.6% Y-o-Y to 36.662 million tonnes
11:07 Verifavia Shipping signs cooperations with 8 ROs to support IMO DCS verification
10:48 Port of Liepaja (Latvia) handled 6.89 million tonnes of cargo in 11M'18, up 13.8% Y-o-Y
10:24 Port of HaminaKotka throughput in 11M’2018 grew by 11.5% Y-o-Y to 14.89 million tonnes
10:07 Oman signs Jeddah Amendment on illicit maritime activity
09:45 Brent Crude futures price up 0.45% to $61.95, Light Sweet Crude – up 0.17% to $52.52
09:19 Baltic Dry Index is up to 1,372 points
09:07 CMA CGM announces FAK rates from Asia to the Middle East Gulf
08:07 Torqeedo displays 2019’s new electric boating products at Salon Nautique International de Paris
07:34 chainPORT concludes its 4th Annual Meeting at the Port of Barcelona

2018 December 9

17:01 Jan De Nul starts beach protection project in Benin
16:06 MOL to participate in construction, ownership, operation of FSRU for Jawa 1 Gas-Fired IPP Project in Indonesia
14:40 Coast Guard continues search for survivors of capsized migrant vessel off Dominican Republic
13:38 CMA CGM announces FAK rates for Asia-Middle East Gulf trade
11:39 MHI Vestas clinches largest MW turbine order for Scotland's Moray Firth

2018 December 8

17:15 Huntington Ingalls Industries names Herman Shelanski as new VP, Business Development at it's shipbuilding division
16:07 Gladding-Hearn built pilot boat delivered to Southwest Alaska Pilots Association
13:12 EGCSA blasts MPA's ban on open-loop scrubbers in Singapore
10:28 Torqeedo displays 2019’s new electric boating products at Salon Nautique International de Paris.

2018 December 7

18:01 Naming ceremony for Arctic condensate tanker Boris Sokolov held at Guangzhou Shipyard International
17:38 Tellurian and Vitol sign MOU for 15-year LNG sale on JKM
17:14 Port of Tallinn rewards emission-reducing ships with a discount of up to 8% on tonnage fees
16:50 Vladimir Putin presents Captain Zybko with Distinguished Maritime Service Order
16:26 BSAP updates move forward at HELCOM key meeting
16:02 Orange Business Services keeps Arctic Shipping Company fleet connected along the Northern Sea Route
15:37 EU NAVFOR promotes maritime security dialogue in Somalia
14:59 Protection structures to be built at the port of Sochi
14:25 Northern Fleet's frigate Admiral Gorshkov takes part in training in the Barents Sea
14:08 ABS signs MOU with KOMERI to create a new facility dedicated to improving the safety of LNG as fuel
13:08 Crowley adds 400 new refrigerated containers to its fleet
12:26 Freight turnover of Neva-Metal (Saint-Petersburg) in 11M’18 climbed by 3% Y-o-Y to about 2.9 million tonnes
11:57 Montreal, Canada to host 14th Arctic Shipping Summit on 13-14 March 2019
11:24 Vladivostok Sea Fishing Port handled 284,000 tonnes of fish in 11M’18, up 25.8% Y-o-Y
11:08 SEA Europe and ECSA pleased with EU’s actions on trade-distortive South Korean measures in shipping and shipbuilding
10:45 Extraordinary General Shareholders Meeting of LUKOIL approves interim dividends
10:21 Brent Crude futures price down 0.62% to $59.69, Light Sweet Crude – down 0.41% to $51.28
10:06 Barcelona City Council supports reducing pollution in the Mediterranean with a low emissions zone
09:42 Bunker prices are slightly down at the Port of Saint-Petersburg, Russia (graph)
09:19 Baltic Dry Index is up to 1,339 points
09:03 Fincantieri launches new ship “Carnival Panorama” for Carnival Cruise Line
08:07 NYK concludes long-term charter agreement for two LNG carriers with Total
07:24 ‘Breakbulk carrousel’ gives breakbulk and heavy cargo companies space for further growth in Rotterdam’s Waalhaven

2018 December 6

18:05 ONE Thailand receives 2018 Best Container Liner Award from Thai National Shippers’ Council
17:54 IAPH LNG bunkering audit tool already used to license operations at Port of Rotterdam
17:35 IMO highlights key elements of the Initial IMO Strategy on reduction of GHG emissions from ships
17:17 2019 port tariff increases at North Sea Port stay below inflation level
17:05 Chinese group Lingang signs 5 MOU’s for the realisation of the Lingang Overseas Modern Industrial Park in Zeebrugge