• 2017 July 13 16:07

    World's bunker market in a state of uncertainty

    The Bunker Review is contributed by Marine Bunker Exchange

    World fuel indexes have demonstrated slight downward evolution during the week with no real firm trend. The prices are still been pressured by evidences of an ongoing fuel glut despite efforts led by OPEC to tighten the market by holding back production. 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) has been steady in the period of Jul. 06 – Jul. 13:

    380 HSFO - down from 287.57 to 286.50 USD/MT (-1.07)
    180 HSFO - down from 328.43 to 327.57 USD/MT (-0.86)
    MGO         - down from 478.50 to 476.79  USD/MT (-1.71)


    The group of world leading banks gave rather controversial forecasts of a further trend in oil prices. BNP Paribas slashed its forecasts for Brent by $9 to $51 a barrel for 2017 and by $15 to $48 for 2018. Barclays also cut its 2017 and 2018 Brent forecasts to $52 a barrel for both years from $55 and $57 respectively.

    Contrariwise, Citigroup expects crude oil prices could rise to US$60 a barrel by this year’s end supporting by growing demand and lower OPEC supply. The IEA also forecast a rise in oil demand this year: it may grow by an average 1.3 million bpd, accelerating from the 900,000 bpd in the first quarter. Production (the IEA’s estimation) was lagging behind demand at 96.69 million bpd in May. These reports suggest at least partial consensus that global oil demand is growing faster than production.

    However, the market still remains doubtful that OPEC-led production cuts will clear a global glut effectively as Russia and Saudi Arabia appear to be less committed than earlier in the year. It seems that Russia may oppose any attempts to deepen the oil production cuts as it may give the impression that OPEC and its partners in the deal are uncertain about its effectiveness in reducing global supplies. In such a case a deeper cut might pressure prices further instead of supporting them. There are some evidences that Russia is also against any further extension of the deal because such an extension will only make oil markets more volatile after it expires, when everyone returns to their normal output rates.

    Saudi Arabia in turn plans to export less: it is planned to cut shipments in August by more than 600,000 bpd, taking exports for that month to their lowest level this year, to balance a seasonal rise in domestic use. Besides, Saudi Ara-bia cut exports to the U.S. last month in an attempt to force USA to begin using oil from its large inventories, which prevent large crude orders from international mar-kets. However, the initiative ultimately failed when Iraq, OPEC’s No. 2 oil producer, began selling its heavy crude to American buyers as a substitute for Saudi Arabian grades.

    Anyway, no further oil output cuts are expected for the July meeting of the ministerial committee set up to monitor compliance with the OPEC-non-OPEC deal. The meeting will take place on July 24 in Russia.

    In this situation OPEC is thinking of putting a ceiling on the crude oil outputs of Libya and Nigeria, as rising production from these two OPEC producers exempt from the cuts is further complicating the cartel’s efforts to draw down oversupply. Nigeria’s crude oil production increased to 1.68 million bpd in May, up by 174,200 bpd over April—the highest level in more than a year—after the restart of Forcados loadings for the first time since October 2016. Libya, for its part, is reaching a 1-million-bpd production—the highest in four years—and in line with its target to have that output reached by the end of July. Militancy, attacks on oil infrastructure, and port terminals blockades have quieted in both African countries, therefore further increases in production are likely. However, the geopolitical uncertainty could quickly cut production levels once again.

    The diplomatic crisis in the Middle East continues. The four Arab states that are leading the boycott against Qatar vowed on Jul.07 to take new political, economic and legal measures and procedures after Doha rejected in full the list of ultimatums. The Suez Canal Authority—one of the busiest waterways in the world—said on Jul.07 that the canal authorities cannot ban Qatari ships from passing through the canal because of international treaties. But Qatari ships will be barred from using Egyptian ports and the economic zone in the canal.

    U.S. drillers went back to adding rigs last week: plus 7, marking a 24th week of increases out of the last 25 and bringing the total count up to 763, the most since April 2015. Although the EIA reported drawdowns in inventories, it also reported a rebound in production figures, dashing hopes that output was on the decline. As of today, U.S. oil production has risen over 10 percent since mid-2016 to 9.34 million barrels per day (bpd).

    PIRA Energy has predicted that U.S. crude oil exports will top 2 million barrels by 2020, reaching 2.25 million bpd. That’s more than what most OPEC members export. As of 2016, the U.S. average daily export rate was just 520,000 bpd, although in May, the average daily was 1.02 million barrels. Canada was the biggest market of U.S. crude exports, taking in 372,000 bpd, oil exports to China stood at 147,000 bpd, and U.S. crude exports to the Netherlands (number 3 in a line) came in at 108,000 bpd.

    All in all market conditions remain weak. While further upside could be expected in the short term amid the speculations of a cut in U.S production, gains may still be limited by the firm oversupply dynamics. We do not expect any drastic changes next week: bunker prices may continue swinging with no firm trend.



     

     

     

     

     

     

    * 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 July 22

15:46 Gazprom Neft to utilise capacity at the St Petersburg Polytech supercomputer
14:22 French shipyard holds naming ceremony for new French icebreaker L’Astrolabe
11:58 Carnival Cruise Line unveils newly renovated cruise ship-themed exhibit at Miami Children’s Museum
10:53 GCT appoints Grosman as new President and CEO

2017 July 21

18:32 Hapag-Lloyd's MV NORASIA ALYA to omit San Antonio Port on MSW Service
18:03 MOL's Kinkasan Maru's engine control console gets 1st 'Ship Heritage' certificate
17:54 Bahri beefs up its fleet of VLCCs with delivery of 300,000dwt tanker ASLAF
17:33 Svitzer will provide marine support services for the Excelerate Energy FSRU in Bangladesh
17:08 The Port of Southampton welcomes ARA Libertad
16:46 Australian LNG exports to surge 22% this year, expert says
16:35 Duke University secures funding of a new marine lab RV construction
16:00 Workshop in Tunis briefed participants on functioning, operation and use of LRIT system
15:37 Drewry: World Container Index drops 6.3% (Jul 20)
15:14 Ukraine’s water transport carried 0.2 mln passengers in Jan-Jun'17, up 27.5%, Y-o-Y
14:52 Cargo transportation by Ukraine’s water transport down 6.7% to 2.3 mln t in 6M’17
14:31 Shell contracted to provide lubes and services for OOCL Hong Kong
14:06 Far East Crab Catchers Association: world’s first ship dedicated for crab catching can be designed and built in Russia
13:40 Krasnoye Sormovo shipyard launches chemical carrier Balt Flot 16 of Project RST27М for BF Tanker
13:15 Fincantieri enters partnership agreement with MAPEI
12:53 ME MetroElectroTrans buys out river fleet of Volgograd for RUB 32.5 mln (photo)
12:42 Harley Marine Services adds new tug DR HANK KAPLAN to its fleet
12:14 NextDecade signs MOU with Port of Cork to develop FSRU and LNG import terminal infrastructure
11:37 MAIB reports on tug Dominigue capsize accident in Madagascar resulting in 2 fatalities
11:19 In HI’2017 TransContainer transported 869,000 TEUs, up 18.7% Y-o-Y
10:58 Academic Pashin tanker underwent inclining experiment at Nevsky Shipyard
10:23 First Damen dredger for Australia TSHD 650 en route to Gippsland Ports
10:16 JFSE launches patented revolutionary jetting technology for subsea excavation
09:59 Oil spill response workshop held in Senegal
09:34 Indicative bunker prices go up at the port of Saint-Petersburg, Russia (graph)
09:17 Baltic Dry Index up to 964 points

2017 July 20

18:35 Wärtsilä reports order intake and net sales growth in H1 2017
18:10 Workshop of International Dialogue on Migration held in Geneva
17:49 ClassNK Singapore marks 50 years with anniversary party
17:35 UK's MCA conducts exercise for response to spills from shipping and offshore installations
17:13 DNV GL releases its updated NOx TIER III compliance guide
17:01 Port of Rotterdam half-year cargo volumes rose 3,9%
16:54 RF Navy's large tonnage warships are training in Kronstadt before the Main Navy Parade
16:35 LUKOIL Board of Directors approves members of Company Management Committee
16:14 Van Oord wins contract for mega waterfront project in Dubai
16:03 No visible drivers on the bunker market so far, expert says
15:53 MacGregor to supply on-vessel equipment to Excelerate Energy
15:31 HHI offers smart ship ICT technology for better navigation and management of ships
15:12 Boskalis contracted to build Stockholm Norvik Port quay wall in Sweden
15:08 Long Beach City Council confirms Colonna, Lowenthal appointments to Board of Harbor Commissioners
14:51 Swedegas and Fluxys LNG start cooperation for LNG project in the port of Gothenburg
14:32 BV granted approval in principle for Wison’s 50MW floating LNG power supply barge
14:06 Cargo shipments by North-Western Shipping Company up 5% to 2.76 mln t in HI’2017
13:40 Marine Recruiting Agency in HI'17 increased the number of graduates by 58%
13:17 Austal continues industry engagement with Queensland businesses for OPV project
12:55 FESCO delivered outsized Power Machine’s equipment to Vietnamese Power Plant under construction
12:33 Port of Gdansk throughput up 3.6% to 18.57 mln t in Jan-June'17
12:11 OSU researchers work to improve AUVs’ energy efficiency
11:58 HII's NNS gets $148.7 million as CVN 80 contract modification
11:50 Frigate ‘Admiral Makarov’, corvette ‘Stoyky’ and major missile boat ‘Dimitrovgrad entered the Neva River
11:29 Bunker prices are slightly down at the Far East ports of Russia (graph)
11:12 Bureau Veritas and Ascenz join forces in ship performance agreement
10:36 USPA submits to Ukraine’s Ministry of Infrastructure a revised draft of the Port Dues Methodology
10:14 Kongsberg Maritime secures first order for autonomous surface vehicle control system K-MATE
09:52 Supervisory board of Tallink Grupp start exploratory process relating to potential strategic options
09:33 Port of Tallinn announces the winner of the design contest for the Old City Harbour bridge