• 2018 March 8 16:03

    MABUX: Bunker prices may continue irregular changes next week while volatility remains

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes started this week with a slight upward movement supported by news that Libya's largest oil field was temporarily idled, as well as forecasts that U.S. crude inventories may have posted a surprise decline last week. However, oil vectors changed direction for downtrend after EIA reported another build of United States crude oil inventories and after a key advocate for free trade in the U.S. government resigned, feeding concern that Washington will go ahead with import tariffs and risk a trade war.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated insignificant irregular changes in the period of Mar.01 - Mar.08:
        
    380 HSFO - up from 352.64 to 353,14 USD/MT     (+0.50)
    180 HSFO - up from 389,79 to 393,14 USD/MT     (+3.35)
    MGO         - down from 606.93 to 604,07 USD/MT (-2.86)


    The International Energy Agency (IEA) on Mar.05 forecast the U.S. would become the world's top crude producer by 2023 with production hitting a record of 12.1 million barrels a day. This is around 2 million barrels a day higher than 2018 production. U.S. oil production has been rising due to the shale boom, helped by technological advances and improved efficiency.  The IEA also expected that oil production growth from the United States, Brazil, Canada and Norway would more than meet global oil demand growth through 2020, add-ing that more investment would be needed to boost output after that.

    Besides, with non-OPEC supply rising quickly, particularly in the U.S., OPEC may struggle to figure out a way to increase output without pushing down prices. That could put pressure on the cartel to keep the production cuts in place for longer than they had wanted.

    Meantime, the cartel has been discussing alternative ways of measuring global supply to replace the OECD stockpiles estimate, which OPEC considers does not give accurate evaluation of the inventories. Even so, IEA data shows that OPEC and its partners led by Russia have been overperforming: the overhang in OECD oil inventories has shrunk to just 52 mil-lion barrels from 264 million barrels a year ago.

    Crude production cuts from the United Arab Emirates caused OPEC's monthly output to fall to a 10-month low in February. The cartel produced 32.28 million barrels per day - netting a reduction of 70,000 barrels per day compared to the previous month. The February output figure amounts to the lowest since April 2017. Compliance to the November 2016 agreement to cut output by 1.2 million barrels per day rose to 149 percent this month, jump-ing five points from January.

    Besides, this week oil ministers from the OPEC and other global oil producers gathered in Houston for the annual CERAWeek Conference started on Mar.05. OPEC Secretary-General Mohammed Barkindo said there is a common understanding between the two sides. However, some OPEC members (Nigeria in particular) argued that cartel needs to begin to look at companies that are very active in shale industry and begin to get them to take some responsibilities in terms of stability of oil prices.

    Geopolitical instability also becomes problematic as the oil market tightens. At the moment geopolitical threats are still existing in various ways in the Middle East and North Africa. In places like Libya, Yemen and Syria there is a lack of legitimacy in government. As a result, Middle Eastern countries are increasing spending on security and defense, and the rising expenditures translate into higher revenue requirements. That means that a lot of key oil producers will need higher oil/fuel prices for their budgets to breakeven in a medium-term outlook.

    Conflict between the U.S. and Iran is potentially one of the top geopolitical risks to the oil mar-ket this year. If the U.S. implemented sanctions only targeting Iranian oil purchases, an initial year reduction could be up to 400,000-500,000 bpd. The drop off would be closer to 600,000 bpd if China, India or Turkey decided to cooperate with the U.S. on some level. However, the efficiency of the U.S. campaign could be significantly undercut if China or any other country decides to increase oil purchases from Iran as other buyers back out.

    The fuel indexes got some support from the news that crude oil production at Sharara, Libya's biggest oil field, was briefly suspended after the pipeline to the Zawiya terminal was blocked. The field resumed operation on Mar.05. Sharara pumps about 300,000 bpd, which is close to a third of Libya's total 1.1 million bpd production.

    The U.S. is going to impose sanctions on a Venezuelan oil services company while also restricting insurance for oil shipments from the South American country. The moves come as the Venezuelan President Nicolas Maduro is planning elections for April. How or when such measures are implemented is still unclear. In any case the effect on the fuel market would be rather significant. Venezuela's oil production is already expected to continue to decline -output is expected to average 1.43 million barrels per day (bpd) this year, down from 2.18 million bpd in 2017.

    The Trump administration announced new tariffs on steel and aluminium imports. The plan calls for 25 percent tariff on imported steel from all countries, plus a 10 percent tariff on aluminium. The announcement immediately sent the Dow Jones Industrial Average down more than 400 points. The tariffs on imported steel would affect a wide array of industries, from aerospace to auto manufacturing, chemicals, oil products and more. The costs may hit the U.S. in many ways: from the higher cost of steel and aluminium inputs into a wide array of products up to retaliatory measures from countries around the world.

    Besides, Trump also may hit at China, which has been one of his primary targets on trade since his presidential campaign. The Trump administration is considering restrictions of Chinese in-vestments in the U.S. and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property. In fact there is a real risk of trade wars at the moment.

    Meantime, exports of U.S. crude oil to Asia seem to decrease. Vessel-tracking and port data suggest Asian imports of U.S. crude were equivalent to about 560,000 barrels per day (bpd) in February, down sharply from 676,190 bpd in January. March's figure may be even weaker: only about 290,000 bpd.  The main reason for a slowdown in U.S. shipments to Asia is likely the narrowing discount of benchmark U.S. West Texas Intermediate (WTI) to Brent, the light crude grade used as a price marker for the rest of the world. Another factor undermining U.S. crude exports to Asia is the likelihood of plentiful cargoes from traditional suppliers in the Middle East and Africa.

    U.S. oil inventories had risen by 2.4 million barrels in the week to March 02. At 425.9 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year, which should stimulate optimism despite a consistent growth in production in the shale patch and upcoming refinery maintenance season that will certainly affect inventories. Besides, U.S. energy firms added one oil rig last week, the fifth weekly increase in a row, bringing the total count up to 800, the highest since April 2011, pointing to more increases in output to come.

    The return of some geopolitical risks from the Middle East and Venezuela plus real threat of trade wars proclaimed by Trump administration may provoke possible ral-ly on global fuel market. However, we still expect bunker prices may continue irregular changes in the near-term.

     

     

     

     

     

     

     

    * 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 September 25

18:37 Colombo Dockyard achieves recognition at the Presidential Export Award
18:10 Tersan Shipyard (Turkey) lays down lead crab catching and processing ship of Project ST184 for Arktikservis
17:56 CMA CGM announces GRR from Asia to South Africa
17:36 The Ocean Cleanup chooses Iridium as provider of satellite communications services
17:20 First RITM-200 reactor intended for nuclear-powered icebreaker Ural left for Baltiysky Zavod shipyard
17:06 ABP opens up Humber International Enterprise Park development plans to public
16:57 Shippers suspect sulphur stitch-up
16:29 Kotug Smit Towage performs naming ceremony for tug Southampton
16:20 Portugal joins WISTA International
15:38 Volga Shipping Company named the best in terms of transport security
15:12 Mr. Birkir Hólm Guðnason hired as CEO of Samskip Iceland
14:11 CMA CGM to review sales policy regarding Low Sulphur IMO 2020 Regulation
13:49 NIBULON successfully completed its passenger transportation season
13:11 North Carolina Ports’ terminals resume full commercial operations following hurricane Florence
12:50 Fuel oil prices are going up in the Far East ports of Russia (graph)
12:31 Havila Kystruten selects Havyard to deliver the ship design and extensive equipment package for four new vessels
12:14 European ports welcome Parliament’s explicit support to remove the tax barriers for shore-side electricity for ships
12:01 Long Beach Commission OKs budget for expanded rail yard
11:43 DHT Holdings announces $50 mln scrubber financing
11:32 Nevsky Shipyard takes part in «Marintec Offshore Russia» exhibition
11:00 GTT receives a new order from Samsung Heavy Industries for the tank design of two new LNG carriers
10:55 NYK announces delivery of new wood-chip carrier for Hokuetsu Corporation
10:24 Baltic Dry Index is up to 1,434 points
10:01 Brent Crude futures price up 0.2% to $80.69, Light Sweet Crude – up 0.12% to $72.17
09:38 Yaroslavsky Shipyard lays down oil recovery vessel of Project Р2114 for Transneft
09:15 Audit summary report to be considered by Sub-Committee on Implementation of IMO Instruments

2018 September 24

18:36 DNV GL unveils the complexity of ocean governance in report for the UN Global Compact
18:03 Klaveness Combination Carriers AS announces completion of USD 45.0 million private placement
17:52 Port of Southampton recognised in top 20 under 40 cruise award
17:36 CMA CGM announces GRR from India West Coast to Mozambique
17:03 Metropolitan Plan for Great Newcastle endorses Port of Newcastle vision
16:50 Ust-Luga Container Terminal handles cargo for Nord Stream 2
16:47 Wightlink names its new flagship
16:45 Bomin exits the bunker markets in Singapore and Antwerp
16:43 Hamburg and St. Petersburg strengthen cooperation at the Port Evening
16:33 DNV GL ends operations in Iran by 4th November
16:19 Vladimir Panchenko dredger built by Shipbuilding - Ship Repair Corporation features local content of 90%
16:03 IMO sadness over Nyerere casualty
15:47 Moby Dik terminal starts handling vessels of Sea Connect line
15:33 Wärtsilä inaugurates upgraded EGC test facilities in Norway
15:20 ESPO wants more ambition on harmonisation of data, while maintaining flexibility in reporting systems
15:03 Vinalines to build 2 terminals at $299 mln in Lach Huyen Port
14:46 Port of Antwerp presents smart port of the future at Supernova
14:33 DFDS Seaways raises capacity on route Zeebrugge - Norway
14:18 Feasibility study of concession of state stevedoring companies «Olvia» and «Kherson» presented for acquaintance to potential investors
14:03 Norway’s largest cruise port of Bergen to build Europe’s largest onshore power supply facility
13:59 Sea Port of Saint-Petersburg named one of the best transport infrastructure facilities
13:34 Average wholesale prices for М-100 HFO up to RUB 21,529 in RF spot market
13:11 Okskaya Sudoverf lays down fourth dry cargo carrier of Project RSD32M
12:45 NOVATEK shipped first LNG cargo to Brazil
12:23 Finalists for the Seatrade Maritime Awards in Dubai announced
12:00 Nor-Shipping 2019 takes place in Oslo and Lillestrøm, Norway, from 04 to 07 June 2019
11:16 Longline factory ship Marlin laid down by Severnaya Verf shipyard to feature 40% of local content
10:54 Damen performs float-out of Australian icebreaker
10:52 NOVATEK increases number of Management Board members
10:28 Smart shipping to be under the spotlight at Seatrade Maritime Middle East
10:05 Baltic Dry Index is up to 1,413 points
09:43 Brent Crude futures price up 1.25% to $79.22, Light Sweet Crude – up 1.2% to $71.63
09:21 Freeport of Riga’s project on construction of Krievu Island Terminal enters its final phase
09:00 Vice Premier Han Zheng inspected COSCO-PSA terminal in Singapore