• 2017 May 18 15:03

    Global bunker market: OPEC meeting is in focus

    The Bunker Review is contributed by Marine Bunker Exchange

    Global oil markets are still not stabilized. After a week of price shocks, with the expecta-tions that crude prices could be hitting the $40 per barrel mark soon, prices are up again. OPEC and Russia have agreed to extend the oil production cut deal until March 2018. The significant point here was the support for a nine-month extension rather than just an extension through the end of the year. The news immediately sent prices higher, although the rise was capped by yet another weekly build in the number of active drilling rigs in the U.S.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) has increased slightly in the period of May. 11 – May. 18:

    380 HSFO - up from 286.14 to 296.36 USD/MT (+10.22)
    180 HSFO - up from 328.36 to 339.64 USD/MT (+11.28)
    MGO         - up from 503.14   to 507.21 USD/MT (+4.07)


    OPEC and Russia have openly discussed a potential nine-month extension of the produc-tion cut deal. The main reason for it is that the present cuts are bringing inventories down at a much slower rate than originally anticipated. As per some evaluations, even extending the cuts through December would only bring inventories down by just 722,000 bpd for a total reduction of about 120 million barrels. That is less than half of the 276 million barrel surplus that existed just in OECD countries at the end of the first quarter.

    Both: Saudi Arabia and Russia are sure that an extension through the first quarter of 2018 will do enough to decrease inventories, supporting fuel prices, but not boosting them so much that U.S. shale comes back even quicker than it already is. They will present their position at a meeting of OPEC and other nations that are part of the agreement on May 25 in Vienna.

    The OPEC/non-OPEC coalition is also trying to bring new countries into the deal, includ-ing Egypt and Turkmenistan. It is doubtful that some contributions from them – with a com-bined total output of 700,000 bpd – would significantly change the pace of adjustment, but their participation may add some psychological support to the market.

    At the same time OPEC boosted estimates for growth in rival supplies by 64 percent as the U.S. oil industry’s recovery accelerates. The forecast said production from outside the OPEC will increase by 950,000 barrels a day this year (up by about 370,000). The projection is four times higher than in November, when the group announced a production cut. The cartel also raised its outlook for U.S. production growth by 285,000 barrels a day to 820,000 a day. Non-OPEC nations pump about 60 percent of the world’s oil.

    So a nine-month extension could result in removal of around 1.8 million bpd from the market, making enough room to counter the expected 1 million bpd of additional oil from non-OPEC countries.

    Meanwhile, two OPEC members: Libya and Nigeria, which were exempt from reducing output because of internal problems, are boosting supplies again. Libya’s crude production has risen to more than 814,000 barrels a day as fields restart, the most since 2014. Nigeria’s 200,000 barrel-a-day Forcados oil pipeline is ready to export again after being shut down almost continuously since February 2016. It’s unclear whether the countries would still be exempted if the deal is prolonged.

    Iraq is another risk for OPEC cut deal. Through the first three months of the year, Iraq has made some cuts but has still not brought production down to its promised target (it signed on to cuts of 210,000 bpd). Meantime, there were comments from some high-ranking Iraqi officials that the country could ramp production up to 5 mb/d this year which would be well in excess of Iraq's promised limit of 4.35 mb/d.

    While OPEC is trying to balance the market, the price gains from its production cut deal added more confidence to the activity and spending plans of U.S. shale. U.S. production jumped to 9.3 million bpd as of end-April, with the EIA forecasting it to hit 10 million bpd in 2018. Now that prices have started going up again, chances are that the growth in U.S. production will continue and even intensify. A new Rystad Energy report said that even if prices fall to US$40, shale producers will continue growing production. There are plans of a combined capital expenditure of US$84 billion this year, an increase of 32 percent compared to last year. By comparison, the budget programs for international projects are seen up just 3 percent in 2017.

    And finally, OPEC made a statement that floating oil storage globally declined by a third in the first quarter of the year. The statement supports OPEC’s claims that the production cut has helped to relieve a glut. Earlier this month Reuters reported that there were 35 tankers with a combined capacity of 65 million barrels of crude staying in the Straits of Malacca in Malaysia – one of the main global oil shipment routes. However, as per other sources, the global supply had not dec lined. On the contrary, the figures suggested maritime supply, and more specifically OPEC supply, actually went up in the first quarter of the year, by as much as 700,000 bpd. The speculations around these figures may cap the potential rise of the fuel indexes.

    So for now there doesn’t seem to be a choice. It’s either to extend or to suffer oil back to the US$30s, which most OPEC members and Russia cannot afford. We expect global fuel market’s volatility to be continued until OPEC meeting. Bunker prices may demonstrate slight upward movement 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)




2018 May 25

18:07 AIDAmira joins to the AIDA Cruises fleet
17:51 Azerbaijan Caspian Shipping Company cooperates with Columbia Shipmanagement to organize internship for ACSC 20 staff members
17:42 Carbon targets for shipping can only be met with ‘zero CO2’ fuels - ICS
17:40 IMO takes first steps to address autonomous ships
17:30 Marine Technics carried supplied marine pumps MT-Azcue for cargo vessels of different types
17:18 Container Terminal St. Petersburg in 1Q invested more than € 3.5 million in development, upgrade programme
17:04 Med Marine tugboat joins the company’s harbour fleet in Turkey’s Izmit Bay
16:59 Aleksandr Bryntsev appointed as Director General of Murmansk Shipping Company (photo)
16:25 Sovcomflot to provide technical supervision for the construction of Rosneft’s new LNG-fuelled tankers
16:04 Sanmar supplies a powerful tug to Forth Estuary Towage in Scotland
15:41 SMM advance press conference covered trends in SMMart Shipping
15:04 Seaspan accepts delivery of fourth 10000 TEU SAVER containership in four ship series
14:03 Port of Oakland online shipping platform goes live
13:33 MSC Splendida enters Busan Port
13:08 Klaipėda LNG terminal receives the 50th cargo
12:32 Transport and logistics sector of Latvia continues work with Chinese partners
12:03 Panama Canal nominated as finalist for Lloyd’s List’s Environment Award
11:50 Taganrog Sea Commercial Port handled 333,000 tonnes in QI’2018, up 4% Y-o-Y
11:24 Multipurpose Reloading Complex handled 1.02 million tonnes of cargo in QI’2018, down 20% Y-o-Y
11:03 Port of Amsterdam launches digital business guide
10:49 NOVATEK and TOTAL become partners in Arctic LNG 2 project
10:27 New Belgium container connection bolsters Port of Hull
10:11 Brent Crude futures price down 0.19% to $78.64, Light Sweet Crude – down 2.25% to $43.97
09:56 Bunker prices are slightly up at the Port of Saint-Petersburg, Russia (graph)
09:33 Baltic Dry Index up to 1,109 points
09:22 ITF backs US dock workers in dispute with port authorities
08:20 Port of Vancouver makes history with the arrival of the 25 millionth
07:18 First eleven companies participate in Nextlogic

2018 May 24

19:04 Coal to Vostochny Port to be transported on Kuzbass-Vostochny Port route by innovative rolling stock
18:07 ZIM posts Q1 2018 results
17:31 Bureau Veritas publishes vital resource for decommissioning industry
17:24 Italy’s first, fully-automated gantry cranes reach Vado Ligure
17:17 Best quarter performance ever at CTSP terminal: 168,500 TEUs, a 7.8% container traffic growth
17:09 Successful testing programme with enhanced Wärtsilä’s navigation systems promotes operational safety and efficiency
16:57 MSC optimises its Transpacific-USWC network
16:15 MABUX: Bunker prices continue upward trend
15:12 UCL Port’s 1Q volumes decline 3.9% Y/Y to 9.4 million tonnes
15:10 ABS evaluation demonstrates feasibility of LPG as fuel strategy for Dorian LPG
14:58 MAN to equip world’s first LNG-powered fishing trawler
14:55 VARD secures contract for one stern trawler for Nergård Havfiske
13:06 TCSP Group’s 1Q volumes fall 8.4% Y/Y to 3.88 million tonnes
12:08 Sea Port of St. Petersburg sees strong growth in 1Q volumes
09:26 Baltic Dry Index drops 37pts to 1162 points
09:08 akquinet and IDENTEC SOLUTIONS join forces to revolutionize refrigerated container management
08:39 Maersk Line starts new transatlantic service between Europe’s Mediterranean region and Canada
08:34 Compagnie Maritime Monégasque and Damen join forces to introduce Fast Marine Access in Brazil

2018 May 23

17:54 Container Terminal Saint-Petersburg invested RUB 256 million in modernization of its facilities in QI’2018
17:27 Greece suggests arranging cruise lines to Russia
17:00 Rosmorrechflot comes out for replacement of shipbuilding subsidies with cheap financing
16:16 Agreement on Enhancing International Arctic Scientific Cooperation enters into force
15:48 New Belgium container connection bolsters Port of Hull
15:25 DALO chooses SARIS to support SAR operations
15:03 FESCO transports three transformers from Novorossiysk for Moscow central heating and power plants
14:42 Ukraine’s water transport carried 0.3 million passengers in 4M’18, down 3%, Y-o-Y
14:21 Hapag-Lloyd update on restrictions for DG cargo handling at FIFA World Cup in Russia
13:59 Cargo transportation by Ukraine’s water transport fell by 18.5% to 1.0 million tonnes in 4M’18
13:36 SASCO BoD elected Aleksey Pavlov as Director General of the company
13:13 “K” Line announces delivery of special coal carrier “CORONA XANADU”
12:52 Tallink Grupp to list shares also on Helsinki Stock Exchange
12:31 Rosmorport appoints Sergey Lyamtsev as Acting Director of its Azov Basin Branch (photo)