• 2017 November 30 15:35

    OPEC+ meeting may set up further upward trend for oil and bunker prices

    The Bunker Review is contributed by Marine Bunker Exchange

    World fuel indexes have been falling since the beginning of the week as doubts mount about Russia’s willingness to extend the OPEC+ production cuts by nine months instead of six, and after TransCanada announced that it is restarting its 600,000-bpd Keystone pipeline.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) followed the general trend of global fuel market and final-ly slightly decreased in the period of Nov.23 – Nov.30:
        
    380 HSFO - down from 360.21 to 354,43 USD/MT (-5.78)
    180 HSFO - down from 401.50 to 396,93 USD/MT (-4.57)
    MGO         - down from 590.29 to 589.21  USD/MT (-1.08)


    The single most important driver for fuel prices was OPEC meeting on November 30 and the deal extension expected to result from it. Rather short agenda (only a 3-hour meeting) suggested that a broad consensus has been built and the meeting would be just a formality to agree the extension of the Saudis’ favored 9-month extension period.

    However, after OPEC meeting oil ministers will meet with their non-OPEC partners. The big-gest among these partners, Russia, has hinted that it may yet have to be convinced of the need for another extension. One of the reasons claimed by Russia is that the production cut deal was adversely affecting the country’s economy including low investment activity due to production limits. Besides, Russian oil producers are against a long extension because stronger oil prices will strengthen U.S. shale production. Anything less than nine months will probably have a negative impact on prices although this effect will likely be short-lived until the market adjusts.

    So, discussions are ongoing as to how OPEC could meet Russia's demands. One idea in-cludes linking the amount of production cuts to the overall supply/demand balance in the market. Another idea would be to make explicit the fact that the deal could be renegotiated early next year in case market conditions change.
     
    Meantime, the determination to keep the cuts in place comes at the same time that U.S. shale seems to be accelerating in response to higher oil prices. The difficulty is that the estimates for how much supply the U.S. will add next year differ by a wide range. The IEA predicts non-OPEC supply growth by about 1.4 million barrels per day (bpd) in 2018 (that would overwhelm demand). OPEC is more hopeful: the car-tel only predicts non-OPEC supply growth of less than 900,000 bpd next year. So the problem is that it is too difficult to forecast with any accuracy what to expect from shale drillers over the next year.

    As for now, U.S. crude production has risen by 15 percent since mid-2016 to 9.68 million barrels per day (bpd), not far from top producers Russia and Saudi Arabia. After several consecutive months of sharp declines in the rig count, the U.S. oil industry added 9 rigs back into operation (for the third week in a row) to 747 active rigs. There is growing evidence that the rig count bottomed out again, and is now on the rise, moving parallel with the resurgence in oil/fuel prices.

    The increased production is likely to translate into higher exports. As a case in point, U.S. crude oil exports to Asia hit the highest in two months, and the second-highest on record, at 877,000 bpd. The biggest buyer of U.S. crude in Asia was South Korea, which took 357,000 bpd, China came in second (222,000 bpd) and India is the third (151,000 bpd).

    The fuel indexes were also supported by the outage of the Keystone pipeline, one of Canada’s main crude export routes to the United States. The pipeline ruptured and spilled more than 200,000 gallons of crude oil in South Dakota. Despite of the announcement that Keystone pipe-line was restarted under reduced pressure on Nov.28, the outage may accelerate the inventory drawdowns in the U.S. (as refiners rely more on storage) and also cut shipments to the U.S. by about 7 million barrels through November.

    The factor of risk for the global fuel market is also Venezuela. After defaulting on debt, Venezuela’s crisis continues to unfold, threatening to worsen the state-owned oil company PDVSA’s production. This year, daily crude production in Venezuela is set to fall by at least 250,000 barrels, and next year the pace of decline may accelerate, reaching 300,000 bpd. The monthly rate of decline this year has been 20,000 bpd. Last month, oil production fell to the low-est in almost three decades, and it looks like the trend will continue as the recession deepens.

    All in all, we expect the OPEC+ will eventually extend the production limits through the end of 2018, although it could be done in a series of announcements rather than all at once. If so, bunker prices have a potential to resume upward trend 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)




2024 March 29

11:20 Sallaum Lines and Fujian Mawei Shipbuilding commence construction of Ocean Class vessels
10:43 Oasis Marine develops solutions for offshore hydrogen bunkering
10:03 Petrofac secures contract extension with ONEgas West in the UK market

2024 March 28

18:05 Jan De Nul, ENGIE and Equans launch a pilot project centred around the use of Vanadium Redox Flow batteries
17:35 Latvian port equipment manufacturer Bleste introduces new bulk handling ‘bucket’
17:05 Investors upgrade Navios Maritime Partners
16:25 DEME reports 22% increase in the orderbook and a record-high turnover of 3.3 billion euros in 2023
16:14 MABUX: Bunker Outlook, Week 13, 2024
15:41 AD Ports Group announced the opening of Saadiyat Marina & Ferry Terminal and Rabdan Marina
15:11 Sydney invests $11.5 million in two new operational vessels designed by Incat Crowther
14:55 China’s Jinzhao wins Peru $405m port construction contract
14:13 APM Terminals Moín handled six million TEU
13:48 ClassNK grants Innovation Endorsements for Products & Solutions to two innovative initiatives by MOL
13:37 Konecranes launches its flagship Konecranes X-series industrial crane
12:53 United European Car Carriers UECC spearheads collaboration with industry leaders to advance CNSL as a sustainable marine fuel
12:26 Ocean Network Express announces Transpacific service
11:48 Yang Ming announces 2025 Trans-Pacific service network
11:24 Fincantieri signs contract for the supply of two PPAs to Indonesia
10:42 Maersk transported more than 660,000 TEU using clean fuel in 2023
10:23 Documentation delays push industry costs to $3bn
09:48 PONANT and FARWIND Energy partner to develop green hydrogen refueling solutions

2024 March 27

18:22 Bureau Veritas awards world’s first prototype certification for SolarDuck’s floating offshore solar solution
17:58 The recently converted Allseas's shallow water pipelay barge starts preparations for its first commercial project
17:38 The Port of Rotterdam calls on the European Commission and Parliament to focus on actively promoting green energy
15:23 SEFE to become sole shareholder of WIGA
14:53 Ocean Installer secures yet another SLM contract with Equinor
14:23 Cadeler signs offshore wind turbine installation contract for the vessel Wind Scylla
13:42 Carnival Cruise Line orders 5th Excel-class cruise ship
13:11 Maersk and MSC overcharging cargo owners for EU ETS, says T&E
12:52 The Port Authority of Valencia launches the ZAL project in the Port of Valencia
12:11 Clarkson Port Services and Peak Group collaborate to deliver Port Agency services across the North Sea
11:42 Wan Hai Lines holds ship naming ceremony for new vessels
11:24 Consolidated shipping lines EBIT loss was $1.44 billion in Q4 2023: Sea-Intelligence
10:49 Seaspan Shipyards receives long-term contracts for the pre-construction work of the the Canadian Coast Guard's first six multi-mission vessels
10:14 Woodside completes sale of 10% scarborough interest

2024 March 26

18:02 COSCO Shipping Lines introduces new Americas service
17:30 Davie awarded first contract for design of icebreaker fleet under Canada’s National Shipbuilding Strategy
17:04 Sanctions complicate Arctic LNG ship sales, Hanwha Ocean says - Bloomberg
16:57 Terntank places an order for 1+1 additional wind/ methanol-ready hybrid tanker
16:28 BW LNG completes acquisition of two TFDE vessels from Stena Bulk
15:50 Hanwha Ocean develops VR-based special vehicle simulator
15:20 TotalEnergies and SINOPEC join forces to produce sustainable jet fuel at a SINOPEC's refinery
14:52 Wärtsilä Lifecycle Agreement to guarantee operational reliability of new wind farm installation vessel
14:23 Hudong-Zhonghua launches two LNG carriers
13:51 Cargo ship hits Baltimore’s Key Bridge
13:12 Final sanctioned tanker with Russian Sokol oil to reach China port - Reuters
12:42 Adani Ports acquires 95% of Odisha's Gopalpur Port from SP Group for $162 million
12:21 IHI and Yara Clean Ammonia agree to jointly assess clean ammonia business collaboration
11:41 Yara Clean Ammonia and Azane granted safety permit to build world's first low emission ammonia bunkering terminal
11:16 Wartsila and Royal Caribbean Group celebrate 15 years of collaboration on digital transformation
10:46 A global carbon tax on shipping is coming, says ABS Chairman and CEO
10:21 Eni, Fincantieri and RINA establish partnership for maritime transport decarbonization

2024 March 25

18:07 The Maritime and Port Authority of Singapore continues to investigate reports of oil spills off the port of Tuas
17:31 “K” Line, NIPPON HAKUYO and OPT Gate sign an agreement for a new fire detection system for car carriers
17:07 Greek merchant fleet recorded slight decline in January 2024
16:47 Hanwha Ocean Plans to develop green technology and naval ships
16:25 U-Ming Singapore and ITOCHU sign milestone MoU for the joint development of ammonia dual-fuel and de-carbonized vessels
15:34 Svitzer targets methanol-fuelled MAN 175DF-M engine for tug application
15:04 Wallenius Wilhelmsen signs contracts for four 9,300 CEU vessels with China Merchants Jinling Shipyard
14:40 Taiwan International Port to upgrade terminal facility at Kaohsiung
13:59 Сruise ship Carnival Freedom catches fire near Bahamas
12:59 Hanwha Ocean wins 2.4 tln-won order for 8 LNG ships
11:16 Inland Ports meet in Paris to talk about the innovation potential of inland ports
10:50 IMO agrees possible outline for maritime “net-zero framework”
10:24 Hapag-Lloyd to continue to avoid the Red Sea route
09:58 QatarEnergy enters time charter agreements with Nakilat for the operation of 25 LNG vessels

2024 March 24

16:18 Inchgreen Marine Park upgraded as part of £11m investment
15:14 A ribbon-cutting ceremony for Solent Rail Terminal Rail was held at the Port of Southampton
14:08 ESNA and Strategic Marine join forces to offer Surface Effect Ship (“SES”) Crew Transfer Vessels (“CTV”) to the market
13:07 First LNG powered vessel calls at HIP