• 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)




2017 November 19

17:31 Wison signs MOU with Shanghai Electric for medium large floating LNG power solution
17:22 Tomini Shipping places order for three Kamsarmaxes
17:15 Shareholders of Teekay Tankers and Tanker Investments approve proposals to permit merger
17:12 Cruise Gate Hamburg announces record growth for 2017

2017 November 18

06:35 Brisbane wins Port of the Year 2017
06:30 Polarcus secures fully prefunded multi-client project in Australia

2017 November 17

18:06 Swiber's subsidiary placed into bankruptcy by the District Court of Helsinki
17:55 Pacific Fleet warships arrive in Chuk Samet port, Thailand
17:36 Damen supports team AkzoNobel in the Volvo Ocean Race 2017-18
17:20 Sevmash floated out nuclear-powered missile submarine Knyaz Vladimir (photo)
17:06 CMA CGM announces FAK rates from Asia to North Europe
16:45 Yantar Shipyard launches first trawler of Project SK-3101R for Kamchatka fishing company (photo)
16:26 DNV GL: Standardisation can help enable the digital transformation of shipping
16:00 Maersk Line appoints new president in North America
15:58 Onezhsky shipyard lays down Yury Maslyukov dredger of Damen TSHD 2000 design (photo)
15:26 IMO runs cooperation for oil spill preparedness in west, central and southern Africa
15:00 Special tactical exercises held at CPC Marine Terminal Tank Farm facilities
14:37 Water Transport newspaper will celebrate its centenary in 2018
14:02 NCC conducts yet another groundbreaking ceremony at the Port of Gothenburg Logistics Park
13:45 MSCC Bronka set to increase its heavy cargo transshipment capacity
13:32 Diana Shipping announces time charter contract for m/v Naias with Phaethon
13:14 Vostochny Port extends its collective labor contract for three years
13:02 Acta Marine's walk-to-work construction support vessel in final construction phase
12:30 Scottish Ports Group call for right infrastructure and planning conditions
12:01 Aker Solutions to provide umbilicals for three offshore Norway field developments
11:53 MOL's newbuilding coal carrier NAGARA MARU to serve JERA Trading
11:17 301 ships loaded with export coal left Rosterminalugol this year (photo)
10:53 Icebreaker Moskva set sail for seaport Sabetta (photo)
10:30 Brent Crude futures price down 0.29% to $61.18, Light Sweet Crude – up 0.24% to $55.27
10:08 ABS raises cyber awareness to marine insurance industry
09:45 Bunker prices go down at the Port of Saint-Petersburg, Russia (graph)
09:21 Baltic Dry Index down to 1,361 points
09:08 ESPO welcomes the agreement between Parliament and Council setting a deadline for global solution on CO2 from shipping
08:29 Port of Long Beach receives U.S. EPA Grant to cut pollution
08:12 Damen’s repair yards update ISO and OHSAS certification

2017 November 16

18:35 APL receives the ‘Best Green Shipping Line’ award from HAROPA
18:05 Shearwater GeoServices awarded ONGC survey
17:35 ITF: ‘new era for fishers begins’
17:23 Expert says geopolitical risks may push bunker prices slightly up
17:05 JAXPORT expands vehicle-handling capacity
16:51 Severnaya Verf will build six processing trawlers for Norebo Holding (photo)
16:35 Hapag-Lloyd implements GRI for Trans-Pacific Trade Eastbound from East Asia to USA and Canada
16:05 OOCL introduces the China Pakistan Express Intra-Asia service
15:37 Oldendorff Carriers in alliance with Welhunt starts transhipment operation in Vietnam
15:30 APM Terminals Poti adds two Azimuth Stern-Drive tugboats
15:05 Teekay LNG Partners establishes Teekay Multigas Pool
14:58 Norwegian Cruise Line orders PrimeServ upgrades for multiple vessels
14:17 Baltic transport ministers meet in Vilnius to discuss the common objectives of the Baltic States
13:49 Murmansk Sea Fishing Port handled 290,100 t in 10M’17, up 13.7% to (photo)
13:25 Sergey Kireev appointed as interim General Director of PJSC NCSP
13:00 Last Early Bird rate for Maritime Reconnaissance and Surveillance Technology conference 2018 expires 30th November 2017
12:38 “K” Line Group introduces new Total Auto-Logistics Business in Chile
12:12 Wärtsilä receives an order from Lunar Fishing Company to supply new trawler
11:59 Damen SAR vessel passes capsize test with engines running
11:58 Bunker prices go up at the Far East ports of Russia (graph)
11:33 First Borey-A nuclear underwater missile carrier to be floated out in Severodvinsk, November 17
11:11 FESCO to deliver production equipment to Great Wall Motors plant being built in the Tula region
10:50 Vostochny Port has shipped 400 mln t of coal from the date of its foundation (photo)
10:04 Brent Crude futures price up 0.18% to $61.98, Light Sweet Crude – up 0.05% to $55.36
09:42 IMO is holding a seminar focused on free-flowing maritime traffic in Montenegro