• 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 January 17

13:25 Throughput of port Kavkaz up 40% to 44.293 mln t in 2017
13:08 OOCL christens the last in latest series of ‘G-Class’ containerships
12:54 Yevgeny Zagorodny steps down as Vice-President of United Shipbuilding Corporation
12:26 Coal exports via Rosterminalugol terminal hit 1 mln t milestone this year (photo)
12:01 The Port of Helsinki takes the top spot among European passenger ports
11:22 De Boer/Dutch Dredging and Iskes Towage take delivery of ASD 2310 SD at Damen Shipyards Hardinxveld
10:43 Port of Gdansk throughput up 9% to 40.6 mln t in 2017
10:19 Brent Crude futures price down 0.1% to $69.08, Light Sweet Crude – down 0.11% to $63.66
10:00 NOVATEK’s hydrocarbons production in 2017 totaled 513.3 mln boe, down 6.2% Y-o-Y
09:37 Bunker prices are flat at the Port of Saint-Petersburg, Russia (graph)
09:15 Baltic Dry Index down to 1,221 points
09:08 Hamburg Süd honored twice for sustainability
08:14 COSCO's container ship to receive cyber enabled ship descriptive note ‘Cyber AL3 SECURE PERFORM (Energy Management System)’

2018 January 16

18:21 Kommer Damen opens Damen Area Support China
18:08 DNV GL approves latest Kongsberg Digital Engine Room Simulators
17:49 Russian Railways: Loading of Russia’s export cargo bound for domestic ports up 6.4% Y-o-Y to 293.4 mln t in 2017
17:26 State stevedores of Ukraine handled 34.73 mln t of cargo in 2017, down 9.6% Y-o-Y
17:00 Andrey Lavrishchev’s report at Hydraulic Engineering Structures and Dredging Congress will focus on promising port projects
16:35 Installation of Belgian topside for offshore substation marks milestone in further construction of Merkur Offshore Wind Farm
16:04 Maersk Line announces increase in FAK rates from Northern Europe to Middle East and ISC and from Mediterranean to Far East
15:52 Jotun Paints congratulates North-Western Shipping Company on its 95th anniversary!
15:34 DNV GL launches new JDP to test biodegradable lubricants
15:04 TTS Group ASA secures contract with Cosco (Dalian) Shipyard for TTS cranes
14:45 New Delhi will host 5th edition of Oil Spill India Conference on 5-6 July 2018
14:29 Norwegian Control Systems delivers automation and bridge control systems to five Fjord1 ferries
14:10 Port Mechel Temryuk hanlded 1.5 mln t of cargo in 2017, up 6% Y-o-Y (photo)
13:37 Russia's crude exports in 2017 rise 7%, year-on-year, to 256.718 million tonnes
13:13 Turnover of DeloPorts’ terminals in 2017 up 28% Y-o-Y to 7.7 mln t
12:49 NSR cargo traffic in 2017 included 9.73 mln t carried by seagoing vessels and 797,190 t carried by river ships
12:28 Singapore will host 22nd HR & Crew Management Conference on 16-17 May, 2018
11:56 Three vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on Jan 15-16
11:34 Bunker prices are flat at the Far East ports of Russia (graph)
11:11 Coal exports from Russia rose 4% to 185.136 million tonnes in 2017
10:50 Oceanographic vessel Admiral Vladimirsky starts research in Indian Ocean
10:25 Brent Crude futures price down 0.4% to $69.98, Light Sweet Crude – up 0.31% to $64.5
10:07 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
09:42 Cargo turnover at inland water ways of Azov-Don Basin down 4.9% to 9.796 mln t in 2017
09:19 Baltic Dry Index down to 1,264 points
09:07 Vroon’s VOS Stone mobilised with Ampelmann A400 gangway system
08:37 MMC First Process involved in the world’s first wellboat simulator
07:03 Crowley announces plans to build new 100,000-barrel Alaska Class ATB

2018 January 15

18:06 The largest hydraulic crane in the world at Vuosaari Harbour
17:29 Port of Tallinn offers Video Guides for car and truck drivers
17:06 Number of sea-going vessels entered the port of Rotterdam up to 29,646 in 2017
16:47 Construction begins on “Crystal Endeavor” at MV WERFTEN
16:43 Throughput of port Taganrog up 29.8% 3,067,100 t in 2017
16:35 QuantiServ introduces robotised laser technology that drastically increases the lifespan of 2-stroke engine pistons
16:16 Ice navigation restrictions at port Vysotsk (Leningrad Region) come into effect from January 29
15:51 Yevgeny Savkin appointed as Director General of Commercial Sea Port of Ust-Luga (photo)
15:27 Three vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on Jan 14-15
15:04 Port of Kiel throughput up 14.3% to 7,407.376 tons in 2017
14:30 Grain transshipment via Russian ports showed highest growth in 2017 among other cargoes, followed by coal and coke
14:02 Crossing of 278 vessel the Suez Canal of tonnage 16.9 million ton during 6 days
13:48 Dry cargo carrier of Project 964, Kalevala, converted for grain transportation (photo)
13:23 Average wholesale prices for М-100 HFO down to RUB 13,037 in RF spot market
13:02 MOL announces full acquisition and name change of Azalea Maritime B.V.
12:41 Egyptian Government targets 5.7 milliard dollars Suez Canal revenues by end of fiscal year
12:05 Adani inaugurates two Royal IHC Beagle TSHDs
11:57 ZIM appoints a Chief Digital Officer
11:39 Change in communications leadership at Hamburg Süd