• 2017 March 16 18:29

    MABUX: High level of uncertainty prevails in the global bunker market

    The Bunker Review is contributed by Marine Bunker Exchange

    World fuel indexes dropped to their lowest levels since December during the week when the optimism surrounding the OPEC deal was just getting underway, but turned into upward correction recently as U.S. crude stockpiles unexpectedly decline last week. The market’s volatility surged the most since before the 2014 price crash started.
    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) dropped in the period of Mar.09 – Mar.16:

    380 HSFO - down from 297.07 to 283.00 USD/MT  (-14,07)
    180 HSFO - down from 339.36 to 326.21 USD/MT  (-13,15)
    MGO         - down from 517.21  to 510.07 USD/MT  (-7,14)

    OPEC’s strategy to balance the oil market and bolster prices is facing its biggest test now. The producer group is aiming to revamp the market by eroding a crude inventory surplus that’s depressed prices since 2014. However, a deal to cut output had the side-effect of triggering a surge in U.S. production and a jump in the inventories to an all-time high. So at the moment the effect of the cuts looks much more short-lived than expected, and the fall in prices last week may indicate a kind of turning point.

    OPEC’s February report showed total output had fallen from 32.097 million bpd in January to 31.958 million bpd. Members which agreed to the production freeze and cuts were able to reduce production from 29.9 million to 29.7 million bpd.

    The International Energy Agency in turn estimated OPEC compliance with agreed output cuts at 98% in the first two months of the year, while Saudi compliance was at 135%. At the same time Russia and other non-OPEC producers' adherence to agreed cuts in the period was only at 37%. If current output levels maintained to June the IEA sees an implied market deficit of 500,000 b/d in the first half of 2017.

    Though OPEC has managed to achieve a high standard of compliance, it has mostly been due to the oversized cut by the largest member of the group—Saudi Arabia. However, last week Saudi Arabia let it leak that the kingdom has no intention of leading OPEC toward another cut in production to accommodate the growing volumes of oil from American shale deposits. It is quite possible that if the situation doesn’t improve in the next few weeks, it is unlikely that Saudi Arabia will continue to bear the responsibility alone.

    Besides, two OPEC members, Iran and Iraq, are weakening Saudi Arabia’s position by taking steps to boost production. According to the IEA, Iraq will increase its output to 5.4 million barrels per day by 2022, which is significantly higher than the earlier estimates of an increase to 4.6 million bpd by 2021. Similarly, Iran is expected to boost production by 400,000 bpd to reach 4.15 million bpd production in 2022.

    A kind of price supporting factor at the moment is Libya, where oil output has allegedly dropped by about 80,000 barrels a day since clashes broke out. Output is now around 620,000 barrels per day (far less than the 1.6 million barrels a day it produced before a 2011 uprising) as Es Sider, the country’s biggest oil port, and Ras Lanuf, its third-largest, remain closed. The country's state oil company - NOC - stated that the Company could declare state of force majeure if the current clashes continue for long.

    The fact that U.S. crude inventories are breaking records every week and oil prices have failed to post any gains so far in 2017 offers the evidence that the comeback in the U.S. oil industry is undermining the effectiveness of the OPEC deal. The U.S. shale oil drillers have used higher prices to add new rigs for the past eight weeks in a row. In the week to March 10, the total rig count increased to 617, compared to 386 a year ago. Though the rig count is still way below the peak of 1,609 reached in October 2014, the recovery from the six-year lows of 316 rigs in May 2016, has been outstanding.

    As a result, U.S. crude oil production, which had dropped from the highs of 9,600,000 bpd in June 2015, to a low of 8,428,000 bpd in July, 2016 is on the rise once again. In the week ending March 10, 2017, U.S. crude output rose for a fourth week, advancing 21,000 barrels a day to 9.11 million barrel a day, the highest level since February 2016. The worrying part for OPEC is that the EIA estimates that U.S. oil production will average 9,210,000 bpd this year.

    The U.S. Federal Reserve raised interest rates by 25 basis points to a range of 0.75 percent to 1.00 percent for the second time in three months. The decision was spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank's target: the arguments supporting global fuel prices as well.

    What happens next is uncertain. The much faster return of U.S. shale production and soft fuel prices have stimulated discussions within OPEC to extend the six-month deal until the end of the year. This week Kuwait became the first member to officially endorse a roll-over of the production cuts for another six months. Iraq and Angola have also suggested they would be open to an extension. It is obvious that fuel indexes will drop if OPEC says that they are not open to extending their production cuts. On the other hand, if prices remain low, OPEC only stands to lose market share to its competitors by continuing the production cuts.

    We do not expect that the situation on the bunker market will clear up next week too much. So bunker prices may stay rather volatile and continue to demonstrate irregular changes.






    * 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 March 17

06:48 Seatrade convicted for trafficking toxic ships

2018 March 16

18:06 Rijkswaterstaat awards Afsluitdijk project to Levvel consortium
17:36 HHLA Container Terminal Burchardkai handles new record ship
17:05 ICS publishes latest Flag State Performance Table
16:51 Vladimir Putin inspected the completed new road section of the Crimean Bridge
16:35 Wison successfully delivers the global largest single cracking furnace module
16:20 GTT announces the end of the test phase of its new LNG brick® technology
16:05 Fincantieri starts building of ultra-luxury cruise ship for Regent Seven Seas Cruises
15:30 Caterpillar Marine announces first European IMO Tier III tugboat
15:03 Throughput of port Kavkaz up 67% to 4.3 million tonnes in 2M’18
14:39 Port of Hamburg proves effectiveness in handling mega-carriers
14:05 Training for port facility security staff arranged in the Dominican Republic
13:42 Multipurpose Reloading Complex takes lead in the industry
13:20 Karachi Shipyards & Engineering Works delivers two Damen Stan Patrol 1605 FRP patrol boats to Pakistan Customs
13:17 Bunker prices continue going down at the port of Novorossiysk, Russia (graph)
12:51 52 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on March 15-16
12:28 Seaports of Russia’s Azov Sea Basin handled 16.77 million tonnes of cargo in winter 2017-2018, up 63.8% Y-o-Y
12:04 Latin America maritime cooperation centre launched
11:40 Vympel Shipyard laid down second armament support ship of Project 20360М for RF Defence Ministry (photo)
11:15 Vostochny Port JSC develops railway infrastructure under its Phase 3 project (photo)
10:52 IMO joined leading oil spill experts to discuss future issues concerning oil spill preparedness, response and restoration
10:27 Brent Crude futures price down 0.11% to $65.05, Light Sweet Crude – down 0.05% to $61.16
10:09 Panama Canal signs agreement with Association of Soybean and Corn Producers of Mato Grosso
09:48 IMO is looking at safety aspects of on shore power supply to ships
09:34 Bunker prices are flat at the Port of Saint-Petersburg, Russia (graph)
09:16 Baltic Dry Index down to 1,150 points
09:03 Damen unveils Multi Cat Water Injection Dredger

2018 March 15

18:25 CMA CGM announces FAK rates from Asia to the Mediterranean
18:11 ICS releases latest Flag State Performance Table (with new criteria included)
18:05 Fincantieri will cooperate with Barzan Holdings
17:57 Throughput of port Kaliningrad in 2M’18 up 16% Y-o-Y to 2.32 million tonnes
17:35 Second Sanmar Voith Schneider Propeller tug joins sister in Israel
17:20 Throughput of port Vyborg up 19% to 197,800 tonnes in 2M’18
17:05 Seaspan acquires Greater China Intermodal Investments LLC
17:02 MABUX: global bunker market still in 'wait-and-see' mood
16:35 DP World announces strong financial results for 2017
16:16 Throughput of port Vysotsk down 5% to 3.06 million tonnes in 2M’18
16:05 ECSA and WSC call for the revision of the Reporting Formalities Directive to improve the efficiency of maritime transport
15:39 Port of Oakland imports up 14.9 percent in February 2018
15:31 Sanmar orders 42 Rolls-Royce thrusters
15:22 Coastal facilities and hydraulic engineering structures under FNPP project in Chukotka to be completed in August 2019
15:07 Port of Dover awards major contract for new Refrigerated Cargo Terminal
14:33 Yang Ming to launch new Japan-Malaysia-Vietnam direct service
14:11 Throughput of port Primorsk in 2M’18 down 32% Y-o-Y to 7.47 million tonnes
13:50 Throughput of port Ust-Luga up 6% to 16.59 million tonnes in 2M'18
13:25 VARD secures contract for the construction of one fishing vessel for Remøybuen AS
13:12 Throughput of Big Port St. Petersburg up 11% to 9.01 million tonnes in 2M’18
12:30 Paweł Jakubowski appointed as President of Polskie LNG S.A. Management Board
11:45 Freeport of Riga is getting ready for new cruise ship season
11:44 MOL announces delivery of the Beluga Ace, 1st next-generation FLEXIE series car carrier
11:23 34 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on March 14-15
11:00 Bunker prices are going up at the Far East ports of Russia (graph)
10:38 Marine Recruiting Agency and Corporate University “Norilsk Nickel” take on joint educational project
10:14 Brent Crude futures price up 0.05% to $64.92, Light Sweet Crude – up 0.11% to $61.03
09:49 Arctic Council will gather in Levi, Finland on 22-23 March 2018
09:17 Baltic Dry Index down to 1,169 points

2018 March 14

18:26 Port of Antwerp sets up maritime training institute in Brazil
18:06 Port of Oakland releases a new 5-year strategic plan
17:55 Baltic Workboats delivers ten more 15m Baltic wave piercing pilot boats to Denmark pilots stations
17:36 Fincantieri upgrades ultra-luxury cruise ship Silver Spirit