• 2018 February 8 17:14

    Bunker prices may continue downward evolution next week

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil prices fell back suddenly over the last few trading sessions. First, a rebound for the dollar led to a steep decline in indexes on Feb.01. Then, sudden turmoil in the broader financial system increased sharply the volatility in the stock market, causing the biggest single-day upheaval in years. One of the main industrial indexes, the Dow Jones Industrial Average fell more than 600 points, only the ninth time in history that a fall of that magnitude has occurred. High OPEC compliance and falling Venezuelan production more or less offset surging output from U.S. shale and an uptick in inventories in the meantime.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated a steep decline in the period of Feb.01 - Feb.08:
        
    380 HSFO - down from 375.36 to 359,57 USD/MT  (-15.79)
    180 HSFO - down from 413,36 to 396,93 USD/MT  (-16.46)
    MGO         - down from 643.07 to 614,29  USD/MT  (-28.78)


    Hedge funds have cut their bullish exposure to petroleum for the first time in six weeks as oil prices stalled and sentiment turned more cautious amid concerns about an increasingly crowded trade. At the moment, there is not enough data to determine whether the position reduction was merely a pause after an extraordinary bull market or the start of a more sustained pull back.

    Goldman Sachs in turn predicts that the oil market has likely balanced, and that Brent Crude will reach $82.50 a barrel within six months. Bank sees the price of Brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast. As per Goldman, the rebalancing of the oil market has likely been achieved, six months sooner than it was expected. The Bank considers, that the decline in excess inventories was fast-forwarded in late 2017 by stellar demand growth, high OPEC compliance, heavy maintenance as well as collapsing Venezuela production.

    Production by the Organization of the Petroleum Exporting Countries (OPEC) rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact. OPEC produced 32.4 million barrels per day (bpd) in January, up 100,000 bpd from December. Last month's total was revised down by 110,000 bpd to the lowest since April 2017. Even so, adherence by producers included in the deal to curb supply rose to 138 percent from 137 percent in December, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.

    While the production cut pact has been a success, there has been growing speculation that the higher oil prices could unravel the deal, because OPEC and/or Russia could either start cheating or see rising U.S. supply as a threat to prices and market share.

    Compliance at OPEC was mostly boosted by the involuntary decline of production in Venezuela. Barclays estimates that Venezuela's production could fall by 700,000 bpd this year, averaging 1.43 million bpd. The crisis continues to erode the country's production base, a drop off that accelerated at the end of 2017. The reasons for the decline are an economic crisis that is only worsening, no cash for investment or even maintenance, a debt crisis, U.S. sanctions, the politicization of PDVSA and a brain drain from the company. Meanwhile, U.S. seemed to offer some measures of support for a military coup in the country. U.S. Secretary of State Rex Tillerson said recently that there will be a change in Venezuela while Maduro could choose to just leave, that would be the easiest.

    As for Russia, Moscow is likely to keep its compliance rate close to 100 percent in 2018. However, it is not excluded, that Russian oil companies may become increasingly nervous about the deal preventing them from ramping up production. One of the scenarios could be that Russian oil firms may consider that the production pact is nearing its end and will ramp up drilling if oil prices continue to be well above $60 and the global stockpiles continue to drop.

    Besides, in November 2017, Russian national pipeline monopoly Transneft said that the sulfur content of Urals oil exports to Europe would reach a critical level in 2017 and continue to rise in 2018 as more low-sulfur crude oil is shipped to China. The company had no technological capacity to continue reducing the sulfur level of Urals crude for European buyers. European refiners are left with lower-quality imports from Russia and are now reviewing how much Russian crude they would buy and at what price: the factor which may change sentiments in global fuel market in a near-term outlook. As the first sign, Saudi Arabia over the weekend said it had cut the official selling prices for its crude to European customers.

    The number of oil drilling rigs in the U.S. climbed for a second week in a row. It rose by 6 to 765 last week, implying that further gains in domestic production are ahead. Besides, the data showed that U.S. crude stockpiles rose 1.9 million barrels last week, which marked the second increase in 12 weeks. The report also showed that U.S. crude oil production, driven by shale extraction, hit 10.25 million barrels per day, the highest level since the early 1970s and close to the output of top producers Russia and Saudi Arabia. Increasing drilling activity for new production means output is expected to grow further.

    China surpassed the U.S. in annual gross crude oil imports in 2017. It imported on average 8.4 million bpd in 2017, compared with 7.9 million bpd of imports for the United States. In total petroleum and other liquid fuels imports, China had become the top global net importer back in 2013. The continuous rise in Chinese oil imports is due to several factors: declining domestic production, growing oil and liquid fuels consumption, a build-up in strategic reserves, refinery sector reform which allows independent refiners to import quotas of crude oil, and increasing refinery capacity and utilization. Last year Russia was China's top oil supplier for a second year running, with Russian crude oil sales up 14 percent and beating OPEC's leader and largest exporter Saudi Arabia for a second consecutive year. Growing Chinese market is still one of the main supportive factors to global fuel indexes.

    There are still signs that the global fuel market is tightening and it is expected that the process will continue in the second half of this year. However, forecasted increase in U.S. crude inventories over the next few weeks and months may change sentiments drastically. Traders may interpret rising U.S. oil production and inventory builds as a sign that the market tightening has slowed with a possibility of downside risk.  We expect bunker prices may continue downward evolution next week while the volatility increases.



     

     

     

     

     

     

     

    * 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 February 19

18:52 Russia’s Glavgosexpertiza gives nod to new phases of ZVEZDA Shipyard construction
18:05 Maersk Line increases FAK rates from Europe to West Coast South America, Caribbean and Middle America
17:05 Hapag-Lloyd introduces Asia – Middle East – New Asia Red Sea Service (AR1)
16:05 Maersk Line increases Reefer FAK rates from North Europe to Far East Asia
15:49 Iskes Towage & Salvage adds two more Damen ASD Tugs 2810 to its fleet
15:25 Maersk Line increases DRY rates from Russia to Far East Asia
15:02 The Russian Register of Seaports updates Port of Tuapse details
14:53 Nevsky Shipyard prepares the Akademik Pashin to test underway replenishment capabilities
14:26 Xeneta increases its data coverage by 161% in 2017
13:49 Rosmorport’s icebreakers assist shipping in the Gulf of Finland, escorted 17 vessels
13:12 GasLog reports financial results for 2017
12:01 GoodBulk announces delivery of Capesize vessel
11:46 Port of Mariupol freight volumes soar 32.3% to 455,860 tonnes
11:08 APL expands Eagle GO. Guaranteed service to 29 Asian port origins
10:48 NOVATEK inks cooperation MoU with Saudi Aramco
10:34 Crude oil futures price grows by 0.85% to $65,39 in London, in New York - by 1.25% to $62,45
09:08 Baltic Dry Index edges down 0.46% to 1084 points

2018 February 18

09:24 Hapag-Lloyd increases rates from Finland, Russia, Baltic States, Sweden, UK to East Asia (incl. Japan)
09:21 Preparing to define the Baltic Sea’s significant marine areas
09:19 Prime Minister Shri Narendra Modi inaugurates the Fourth Container Terminal of JNPT in Mumbai
09:14 Holland America Line to launch New EXC In-Depth Voyages

2018 February 16

18:06 CMA CGM announces FAK rates from the Indian Subcontinent to North Europe and the Mediterranean
17:54 Future Outlook Forum will take place on 20 March as part of Intermodal Asia 2018
17:36 Global Container Terminals orders 10 more Konecranes RTGs for its terminals in British Columbia
17:09 University of Kent partnership helps the Port of Dover cut queues and boost efficiency
17:06 Port of Oakland reports 2.1 percent increase in export volume in January 2017
16:58 Container throughput of port Hong Kong (China) up 9.2% to 1.81 million TEUs in January 2018
16:35 Royal Vopak expands Vopak tank terminal (JTT) in the Port of Jakarta - Indonesia
16:05 DP World signs agreement with government of Jammu and Kashmir at World Government Summit
15:53 Murmansk Sea Fishing Port handled 11,600 t of fish in January 2018, up 26.1% Y-o-Y (photo)
15:26 Cargo traffic through NSR in 2017 grew by 36% Y-o-Y to 9.9 mln t
15:25 PPR 5 agrees on the outline of IMO draft guidelines for implementation of the 2020 sulphur limit
15:01 NOVATEK to invest USD 1.5 billion in construction of LNG terminal at Kamchatka
14:37 Rosmorport announces tender for maintenance dredging at Volga-Caspian Canal
14:14 22 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on February 15-16
13:49 TransContainer’s net income in 2017 more than doubled Y-o-Y to RUB 5.42 million
13:25 Nuclear power plant of Vaygach icebreaker breaks Arktika’s record
12:30 Rosmorport appoints Irina Egorova as Chief Accountant of its Vanino Branch (photo)
11:56 BSM and Babcock International Group collaborate on innovative LNG Supply Vessel
11:23 EBRD supports efficient grain logistics in Ukraine
11:00 WFS, Marinvest, IINO, Mitsui, NYK to build four new ocean-going vessels capable of running on methanol
10:28 Research vessel Admiral Vladimirsky leaves Mumbai port, India
10:00 Port of Rotterdam container throughput up 12.3% in 2017
10:00 Brent Crude futures price up 0.51% to $64.66, Light Sweet Crude – up 0.54% to $61.67
09:39 New DNV GL class notations aim to improve stern tube bearing performance
09:34 Bunker prices continue going down at the Port of Saint-Petersburg, Russia (graph)
09:15 Baltic Dry Index down to 1,089 points

2018 February 15

18:27 Largest vessel to call at The Port of Philadelphia arrives from the West Coast of South America
18:06 Ampelmann gangway system installed succesfully on the Wagenborg Offshore's Walk to Work vessel
17:06 CMA CGM announces FAK rates from North Europe to China & Far East
16:57 Bunker market in anticipation of upward correction
16:38 Container throughput drives growth in Rotterdam
16:05 Caterpillar Marine announces upgrades to reman models in commercial and yachting applications
15:57 Kont to build 4 cruise terminals in the Leningrad Region
15:24 Number of maritime accidents in North Sea Canal Area down in 2017
15:04 LUKOIL's hydrocarbon production in 2017 up 2.4% Y-o-Y to 2.23 million boe per day
14:39 Peresvet and Oslyabya, ships of RF Navy’s Pacific Fleet, sail in training zone in Sea of Japan
14:16 UN Environment visits IMO
13:43 Jan De Nul to install wind turbine generators in Germany
13:12 Seaborne cargo throughput in Hamburg was stable Y-o-Y at 136.5 million tons