• 2017 June 15 15:41

    Expert says no visible upward drivers on the bunker market at the moment

    The Bunker Review is contributed by Marine Bunker Exchange

    World fuel indexes have demonstrated downward evolution during the week, still been pressured by evidences of an ongoing fuel glut despite efforts led by OPEC to tighten the market by holding back production. The underlying factors for the price drop are the same as before: U.S. shale production continues to rise; inventories remain elevated; and the markets are concerned that the OPEC cuts are not doing enough to drain the surplus.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) also continued downward movement in the period of Jun. 08 – Jun.15:

    380 HSFO - down from 282.50 to 279.43 USD/MT  (-3.07)
    180 HSFO - down from 321.86 to 319,79 USD/MT  (-2.07)
    MGO         - down from 482.07 to 474.00  USD/MT  (-8.07)


    Major Banks have started lowering their oil price forecasts for this year and next. Goldman Sachs cut its Brent price forecast for this year to US$55.39 per barrel (minus US$1.37). It also revised down its WTI projections to US$52.92 a barrel (minus US$1.88). As per Goldman, the oil glut will return after OPEC’s deal expires.

    For 2018, it was JP Morgan that made the most drastic cut to its oil price projections, expecting failure of OPEC cut production deal. JP Morgan slashed its 2018 WTI forecast by US$11 to US$42, and for Brent by US$10 to US$45. Bank considers that the 2018 oil market balance now points to rapid builds in inventories which, absent continued OPEC support, should depress oil and fuel prices. On the other hand, U.S. crude output is expected to keep growing for several quarters due to lower breakeven costs and higher investment. The main conclusion is: if OPEC wants to keep the market balanced next year, they will probably need to extend the production cut to all of 2018.  

    The EIA  stated that the massive inventory overhang might last longer than it origi-nally predicted. It is also growing more confident that U.S. oil production will surge past 10 million barrels per day (mb/d) by 2018 (would be an all-time record for the United States). The EIA also expects relatively unimpressive drawdowns in inventories this year, projecting declines of just 0.2 mb/d worldwide in 2017. But the most pessimistic point is that the EIA sees inventories rising again in 2018 by 0.1 mb/d.

    Saudi Arabia in turn predicts that crude markets will rebalance despite of U.S. companies’ drilling activity rises. The country doesn’t see any need for changes to the oil-cuts deal agreed on by OPEC and its allies last month in Vienna. At the same time, Russia is committed to doing everything it can to balance the market. It forecasts, that a deal among oil-producing countries to curb production and balance an oversupplied market will achieve its objective in the first quarter of next year.

    Nevertheless, a 10-percent decline in oil prices since late May could push traders to keep crude in storage. Shipping data shows that at least 15 supertankers are still staying in Southeast Asia's Strait of Malacca and Singapore Strait, filled with unsold fuel. While that is less than in previous months, it's still very possible that volumes in storage could easily rise. 21.5 million barrels per day (mb/d) of crude came to Asia on tankers in May (down from a peak in February, but similar to levels in late 2016, before production cuts were announced).

    The severing of diplomatic ties by several Gulf States with Qatar became a move that temporarily rattled the fuel market. The initial reaction was that any tension in the Middle East is always supportive for crude and fuel. However, major effect of this diplomatic confrontation is likely to be felt in the shipping sector. Ships traveling to and from Qatar have to find an alternate refueling port, and LNG shippers will have to adjust schedules and routes. This will increase costs, and in the near term, may form some support to the fuel prices.
     
    Nigeria has presented downside risks to fuel prices. On Jun.06 Royal Dutch Shell just lifted its force majeure on its Forcados oil shipments (an estimated 250,000 barrels per day) which has been offline for more than a year. It means that Nigeria is set to add the equivalent of one-fifth of the size of the OPEC cuts back into the market. Libya also revived output to 820,000 barrels a day, from 618,000 last week, after restarting its Sharara oilfield.

    Threatening to undermine OPEC's efforts is rising U.S. drilling activity, which has driven up output in the United States by more than 10 percent since mid-2016, to over 9.3 million bpd.  American explorers added oil rigs for the 21st straight week to the highest level since April 2015: by 8 to 741 units.  Meantime, U.S. exports have spiked in recent weeks. However, higher levels of U.S. exports do not necessarily mean global fuel market is rebalancing: U.S. producers are simply taking advantage of temporary pricing differentials (Brent-WTI).

    China’s crude imports increased as well (averaged about 8.8 million barrels a day in May, up 4.8 percent from the previous month) as refiners snatched up cargoes to prepare for the end of seasonal maintenance. Net exports of oil products jumped 50 percent from April to 1.51 million tons. Crude demand has increased on growing need for transportation fuels and strategic stockpiling. Meanwhile, domestic output has stagnated as producers shut high-cost wells.

    Taken altogether, the fundamentals continue to look poor. The end result could be that oil indexes may get stuck in the mid-$40s in the near run, rather than gradually rising as pre-viously expected. There are no visible upward drivers on the bunker market at the moment. We expect bunker prices may continue downward evolution 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 August 22

11:59 Maritime security code under review
11:36 ABB’s Onboard DC Grid enables integration of energy storage on specialized hybrid wind farm vessel
11:24 Stealth Maritime Corp. comments on collision of Navy vessel and its Liberia flagged tanker
11:12 FESCO launches its first transit train between China and Europe via Mongolia
10:44 About RUB 14 bln spent for construction of Vykhodnoy-Lavna line under MTH project – Murmansk Region Governor (photo)
10:20 Brent Crude futures price up 0.58% to $51.97, Light Sweet Crude – up 0.59% to $47.81
09:57 Association of Commercial Sea Ports congratulates the management and the team of UCL Holding on the group’s 10th anniversary!
09:35 Coal exports via Rosterminalugol terminal hit 15 mln t milestone this year (photo)
09:14 Baltic Dry Index up to 1,099 points

2017 August 21

18:06 Bahri completes registration of ASLAF under Saudi national flag
17:51 BC Ferries releases first quarter results
17:28 Khersones sailing ship takes part in celebrations marking Yalta City Day
17:06 ClassNK paves the way for HKC verification expansion to South-East Asia
16:53 Passenger Port of St. Petersburg welcomed 15 cruise ships last week
16:32 CMA CGM announces GRI from Asia to Panama, the Caribbean and Cuba on PEX2 service
16:14 Damen launches free dredge calculator
15:46 Linter Shipping Agency congratulates UCL Holding with its 10th anniversary!
15:18 Vice-Admiral Kulakov, major ASW ship of RF Navy’s Northern Fleet made the first business call to Cyprus
14:57 Admiral Vladimirsky research vessel of RF Navy's Baltic Fleet crossed the English Channel
14:29 MNP Group congratulates the team of UCL Holding on the 10th anniversary!
14:00 Average wholesale prices for М-100 HFO up to RUB 11,601 in RF spot market
13:33 RF President gives instructions for allocation of RUB 100 bln in 2017 to modernize BAM and Transsib infrastructure
13:02 Qatar and RasGas complete the first co-loading of LNG for split delivery
12:51 Vostochny Port’s Phase 3 obtains 34 units of small-scale mechanization equipment for RUB 300 mln (photo)
12:46 Nakilat and Shell complete first phase of LNG carrier management transition programme
12:02 Marine Engineering Bureau congratulates its colleagues from Universal Cargo Logistics Holding on the 10th anniversary!
10:48 Total to acquire Maersk Oil for USD 7.45bn
10:40 Brent Crude futures price down 0.06% to $52.69, Light Sweet Crude – flat at $48.66
10:17 Weatherdock's easyONE gets TOP grade at YACHT magazine test reports
09:56 Bunkering tanker Aginskoye will operate at the ports of Varna and Bourgas (Bulgaria)
09:34 Russian Maritime Register of Shipping congratulates UCL Holding management and personnel on the anniversary
09:17 TEN charters two Suezmaxes
09:13 Baltic Dry Index up to 1,260 points

2017 August 18

18:21 TOTE plans to establish new U.S. mainland to Hawai’i shipping service
18:06 CMA CGM announces FAK Rates from Asia to Mediterranean
17:55 NCSP volumes for 7M 2017 totaled 85.2 mln tons
17:27 Alexander Masko re-elected as Director General of Murmansk Commercial Seaport (photo)
17:06 Austal and ASC Shipbuilding re-commit to sovereign national shipbuilding endeavour
16:42 Nuclear-powered icebreaker 50 Let Pobedy sets a record having reached the North Pole for 79 hours
16:18 IBIA supports continued efforts to protect MFM integrity and expanding application to terminal loadings
16:16 Fjord Line doubles the capacity on the fastest route between Norway and Denmark
15:45 Sea Port of Saint-Petersburg renews its equipment
15:19 Finnish Transport Agency reports increase of import/export volumes in international seaborne trade of HI’17
14:51 Indicative bunker prices go down at the port of Saint-Petersburg (graph)
14:26 Marine Rescue Service of Rosmorrechflot congratulates the team of UCL Holding on the group’s 10th anniversary!
14:04 Severodvinsk nuclear submarine of the Northern Fleet carried out missile firing
13:40 Arctic Economic Council took part in 2017 North Pacific Arctic Conference
13:02 CMA CGM announces GRI from Asia to Mexico, West Coast South America & West Coast Central America
12:37 Tuco Marine delivers hydrographic survey boat to Nelleman Survey
12:23 LNG Croatia announces investigation of the seabed at LNG terminal site
11:38 Nevsky Shipyard congratulates the team of UCL Holding with the group’s 10th anniversary!
11:09 Team Tankers International announces Q2 2017 results
10:45 FSBI Baltic Sea Ports Administration congratulates the team of UCL Holding on the group’s anniversary!
10:22 Brent Crude futures price down 0.12% to $50.97, Light Sweet Crude – down 0.13% to $47.03
10:00 Port of Cardiff invests over £4 million to support steel sector
09:37 Tehnoros congratulates the team of UCL Holding on the group’s anniversary!
09:14 Baltic Dry Index up to 1,247 points
07:48 Admiral Vidal Francisco Soberón Sanz takes part in a symbolic coin ceremony at Damen Schelde Naval Shipbuilding

2017 August 17

18:06 Carnival Paradise to offer five additional cruises to Havana, Cuba, from port of Tampa in 2018
17:50 10 cruise ships will call at the Port of Southampton this weekend