• 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)




2019 January 18

15:21 Bunker sales at the port of Singapore in 2018 fell by 1.7% Y-o-Y to 49.8 million tonnes
15:03 Panama Direct service CMA CGM to resume weekly rotations
14:47 Throughput of port Vysotsk in 2018 climbed by 7% Y-o-Y to 18.79 million tonnes
14:33 GranIHC appointed contractor for Equinor’s Peregrino Phase II Project
14:19 Port of Ust-Luga handled 98.72 million tonnes in 2018, down 4% Y-o-Y
14:03 Algoma Central Corporation increases its interest in ocean self-unloader Pool
13:50 18 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 17-18
13:35 Throughput of the Port of St. Petersburg in 2018 up 11% Y-o-Y to 59.32 million tonnes
13:18 CMA CGM unites its Containerships and MacAndrews brands
13:11 Vladimir Putin supports Government’s proposal on expanding Far East Ministry’s functions with Arctic issues
12:49 Throughput of port Kavkaz in 2018 grew by 11% Y-o-Y to 49.276 million tonnes
12:26 MV Werften purchases Neptun Ship Design
12:08 Sakaide shipyard holds naming ceremony for new LNG carrier jointly owned by NYK and JERA
11:38 PGNiG SA signs agreement for oil and gas exploration and production in UAE
11:14 Remote pilotage to be allowed in Finland
10:47 Free zone status is a crucial advantage for the future development of the Freeport of Riga
10:06 Ice restrictions at the port of Ust-Luga come into effect on January 31
09:42 Brent Crude futures price up 0.9% to $61.73, Light Sweet Crude – up 1.09% to $52.64
09:20 Baltic Dry Index is up to 1,077 points

2019 January 17

18:13 PORT OF KIEL presents annual results 2018
17:51 Ice restrictions at the port of Primorsk come into effect on January 25
17:28 Global Ports sets up a common service call centre
17:09 EFIP welcomes and supports the European Parliament position on the Connecting Europe Facility for 2021-2027
17:05 North Sea Port monitoring the Brexit closely
16:44 ABP invests £700K to boost storage at Port of Ipswich
16:27 Global fuel market: still many uncertainties in both demand and supply
16:22 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
16:05 OCEAN Alliance extends duration of OCEAN Alliance to ten years
15:42 COSCO SHIPPING Ports signs agreement with PSA to add two new berths at the terminal in Boao, Hainan
15:31 Liebherr supports the 6th International Forum of Dredging Companies as its Sponsor
15:02 Ocean Yield ASA agrees to acquire a modern Suezmax tanker for a consideration of USD 56.0 mln
14:02 SEACOR Marine enters agreement to acquire three additional platform supply vessels from affiliates of COSCO Shipping Group
13:49 Throughput of Chinese ports grew by 4.2% to 9.22 billion tonnes in 2018
13:32 Jensen Maritime provides design for Shaver Transportation’s new tugboat
13:14 OOCL rolls out third phase of Ocean Alliance product refinements
12:50 Baltic Ports Organization’s schedule for 2019 is set
12:38 Port of Los Angeles breaks all-time cargo record in 2018
12:26 Qatar accedes to load lines convention
12:01 Sunseeker International and Rolls-Royce to present first production yacht with MTU hybrid power in 2020
11:51 Bunker prices continue going down at the Far East ports of Russia (graph)
11:38 Port of Zeebrugge handled 40.1 million tonnes in 2018
11:25 Nor-Shipping reveals stellar line-up for Ocean Leadership Conference
10:52 10 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 16-17
10:28 NOVATEK’s hydrocarbon production totaled 548.4 million boe in 2018, up 6.9% Y-o-Y
10:03 Brent Crude futures price down 0.34% to $61.11, Light Sweet Crude – down 0.54% to $52.03
09:39 Tallink and Taltech to collaborate on developing smart ship solutions
09:17 Baltic Dry Index is down to 1,055 points

2019 January 16

18:36 Kongsberg Gruppen enters into an agreement with Rome AS to divest Kongsberg Evotec
18:06 Seaspan Corporation announces the closing of the second tranche of the $1 billion aggregate investment commitment by Fairfax
17:55 INEOS, Europe’s largest petrochemicals company, announces Antwerp as the location for its new ground breaking 3 billion Euro petrochemical investment
17:50 Throughput of Rostov-on-Don port in 2018 grew by 11.5% Y-o-Y to 24.1 million tonnes
17:36 Rolf A. Sandvik resigns as CEO of The Fjords
17:06 Digging begins in construction of new Antarctic wharf
16:52 Throughput of Russian seaports in 2018 grew by 3.8% Y-o-Y to 816.5 million tonnes (detalization)
16:31 IMO’s polar communication and navigation equipment guidance to be finalized
16:14 COSCO Shipping Lines launches Ocean Alliance 2019 service products
16:10 Ice restrictions at Passenger Port of Saint-Petersburg come into effect on January 25
16:05 Realogis publishes market report on the letting of logistics properties and industrial sites in the greater Hamburg area for 2018
15:46 Ice restrictions at Big Port of St. Petersburg come into effect on January 25
15:33 Verifavia Shipping cements leadership position for EU MRV and IMO DCS IT system certification