• 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 October 15

18:23 MOL joins hands with partners to launch FOCUS project
17:59 Moscow to host a conference on construction of LNG-powered and LNG bunker ships on October 24
17:46 Algoma announces cancellation of Croatian newbuilds contracts
17:05 Klaveness Combination Carriers AS registered on NOTC
16:56 Tall ships arrive at Port of Ipswich as part of 'Race of the Classics'
16:37 Coast Guard ends search after plane crash victims bodies are located
16:20 Krasnoye Sormovo shipyard delivers 8,140 DWT Pola Fiva, fifth dry cargo carrier of Project RSD59
16:04 DNV GL leads consortium to update Carbon Trust Floating LiDAR Roadmap
15:34 East Mediterranean projects take steps towards adoption of alternative fuels
15:04 NYK approves Japan Climate Action Summit declaration
14:51 Wärtsilä LNG solutions featured on environmentally advanced cruise ship
14:35 Coast Guard sets port condition X-ray in Georgia, South Carolina
14:17 Andrey Shunin appointed as General Director of Caspian Energy Management
13:28 Cooperation for sustainable shipping in the Mediterranean
12:41 ACL christens its newest G4 vessel, the Atlantic Sun
12:13 Kongsberg Digital and KPMG launch new complete cybersecurity partnership for the maritime industry
11:55 Nevsky Shipyard took part in Offshore Marintec Russia
11:19 ABS leads industry discussion on digitization, safety and compliance
11:12 New shipping route links Gdansk and Scandinavia
10:51 Port of Gdansk considered as transport hub for Slovakia
10:29 Brent Crude futures price up 1.21% to $81.4, Light Sweet Crude – up 1.04% to $72.08
10:10 Tuco Marine Group to build a multipurpose first responder boat for Hovedstadens Beredskab I/S
09:53 Baltic Dry Index is up to 1,579 points
09:34 Gazprom and Shell discuss next steps in Baltic LNG project
09:15 Throughput of port Helsinki (Finland) in 9M'18 up 8.4% Y-o-Y to 11.38 million tonnes (table)
08:07 PIL terminates all calls to Iran due to US sanctions
07:06 ChainPORT hackathon held for the first time simultaneously in the ports of Antwerp and Los Angeles
06:16 Vinalines posts profit of US$900,000 in the first nine months of 2018

2018 October 14

09:19 CMA CGM announces FAK rates from Asia to North Africa
09:17 CMA CGM announces FAK rates from Asia to the Mediterranean
09:16 Port of Corpus Christi moves record tonnage in first nine months of 2018
09:12 Port of New Orleans receives Excellence Award for Master Plan

2018 October 13

09:06 OOCL fleet moves forward to meet IMO 2020 regulation
09:04 CMA CGM announces FAK rates from Asia to North Europe
08:56 Algoma announces cancellation of Croatian new build contracts
08:54 Panama Canal sets record annual cargo tonnage in fiscal year 2018

2018 October 12

18:07 Port of Antwerp on track for sixth record year
17:36 Strengthening of Kaliningrad seaway canal's embankment included in Russia’s territorial development strategy through 2025
17:08 Stena Bulk in partnership with Bay Crest Management for expansion in Asia
16:04 Groundbreaking ceremony marks start of work at DP World Berbera in Somaliland
15:52 LNG Croatia invited bids for import LNG terminal infrastructure
15:35 Azerbaijan Caspian Shipping Company continues expanding its operations in international waters
15:03 Maersk Line announces an increase in FAK rates from Far East to North Europe
14:47 Minister Berner: Finland strives to reduce emissions from shipping
14:03 CMA CGM to introduce new quarterly BAF for long term contracts from 1st of January 2019
13:44 LUKOIL commissions fifth well at Filanovsky field second stage
13:21 Ocean Network Express enters bilateral feeder network cooperation with Hapag - Lloyd
13:10 MOL consolidation service succeeds with trial of remote container tracking management device
12:28 Germany furthers support to WMU with Simulator Lab refurbishment
12:05 Yangzijiang Shipbuilding Group in China and Mitsui & Co., Ltd. to establish a shipbuilding joint venture
11:47 BPO pays a visit to the Port of Ust-Luga
11:26 Rosterminalugol exported 16 million tonnes of coal YTD
11:05 Grimaldi further boosts its freight services to Sardinia
10:54 Bunker prices continue going up at the Port of Saint-Petersburg, Russia (graph)
10:50 Port of Gothenburg starts construction of new terminal
10:30 Brent Crude futures price up 1.2% to $81.22, Light Sweet Crude – up 1.18% to $71.81
10:11 De Boer holds naming ceremony for Damen RSD WID Tug 2915 Hybrid Fregate and ASD Tug 2310 SD Papillon
10:09 Baltic Dry Index is down to 1,515 points
09:58 Damen signs for another three years as founding partner of the Nederlands Dans Theater
09:51 Fuel oil prices show no significant changes in the Far East ports of Russia (graph)