• 2017 December 7 18:15

    MABUX Weekly Report: Rising oil production in the U.S. may pressure bunker prices

    The Bunker Review is contributed by Marine Bunker Exchange
     
    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) declined sharply in the period of Nov. 30 - Dec. 07:

    380 HSFO - down from 354.43 to 347.14 USD/MT (-7.29)
    180 HSFO - down from 396.93 to 388.50 USD/MT (-8.43)
    MGO        -down from 590.07 to 576.57 USD/MT (-13.50)

    OPEC and non-OPEC producers led by Russia agreed on Nov.30 to extend oil output cuts until the end of 2018. After this decision, the main drivers to influence bunker indexes are oil inventories and output levels in the U.S.

    OPEC also decided to cap the combined output of Nigeria and Libya at 2017 levels below 2.8 million bpd. Both countries have been exempt from cuts due to unrest and lower-than-normal production. There was also announced, that all parties would review the agreement at the next OPEC meeting in June. That seems to be a formality since the meetings are always a time and place at which OPEC assesses the situations on the oil market, but if the market tightens too much and prices rise significantly, Russia could push to end the agreement early. With oil prices rising above $60, Russia has more concerns that an extension for the whole of 2018 can prompt a rise in crude production in the United States, which is not participating in the deal. Another problem, that may arise, is to find more safety mechanism to finish the agreement not to let prices to fall. At the same time, Goldman Sachs boosted its oil price forecast following the OPEC meeting. It expects crude prices to gain 9 percent over the next year, but U.S. shale will still add new supply.   

    One of supporting factors today is that crude production from OPEC countries dropped again in November to a six-month low according to Bloomberg. Total production fell 80,000 barrels a day to 32.47 million a day last month. That was the lowest level since May, when output was 32.29 million. Much of the decline was the result of a 100,000-bpd decline from Angola, due to field maintenance.

    News from Nigeria also made a little support to the indexes. On November 29 residents of the Bayelsa region in Nigeria disrupted oil production at a field operated by Shell, shutting down two oil wells. Demonstrators demand power supply to their homes from the oil facility nearby.

    The pace of China’s oil imports growth is one of the most closely watched indicators on global fuel market. China is importing increasing volumes of oil not only because of demand growth, but also because its domestic oil production is declining as large ageing fields mature and as companies cut production from higher-cost fields amid the lower-for-longer oil prices. Therefore, Chinese dependence on crude oil imports is continuously rising and is set to further grow in the foreseeable future. As a result, China’s oil import reliance exceeded 65.6 percent in 2016 and is forecast to rise to 80 percent by 2030. By 2020, Chinese consumption of crude oil is expected at 12 million bpd.

    Moreover, Asian refiners are after U.S. crude oil as WTI continues to trade at a comfortable discount to Brent. Сrude oil shipments from the Gulf of Mexico and the Caribbean to China, Japan, South Korea, Singapore, and Taiwan jumped from about 500,000 bpd at the beginning of this year to over 1.2 million bpd. Data from Kpler showed earlier that in October, the amount of crude leaving U.S. ports averaged 1.6 million bpd, a lot of this bound for Asian refiners. Shipments of U.S. crude to Asia will likely continue to rise as production, especially in the shale patch, is increasing. This will eventually have a negative effect on prices.

    The Energy Information Administration reported a 5.6-million-barrel draw in crude oil inventories for the last week. Forecast expected a draw of 3.507 million barrels. But more notably, the EIA confirmed a large build of 6.8 million barrels in gasoline inventories. U.S. crude oil imports averaged 7.2 million barrels per day last week - a decrease of 127,000 barrels per day from the previous week. The EIA also said, refineries operated at 93.8 % of their operable capacity last week. Moreover, U.S. oil rig count rose again last week. The number of oil rigs operating in the US rose by 2 to 749 (versus 477 a year ago). Rising U.S. oil production may level OPEC's efforts in rebalancing the market and that prevents prices from rising much further.

    Meantime, researchers have discovered a flaw in the EIA’s official forecast, which might mean that the Agency is vastly overstating the potential growth of oil and gas production. In particular, the EIA has assumed technology has been behind much of the growth of shale, but the researchers said recent growth is more due to the fact that low prices have forced drillers to focus only on the most productive rigs. The conclusion is that total U.S. oil and natural gas production could undershoot EIA forecasts by 10 percent by 2020, a disparity that widens in subsequent years.

    The main risk at the market now is that the OPEC’s production cut extension, and as a result rising oil prices, may push U.S. output up. Meantime, both: OPEC and Russia don’t see global inventories falling back into the five-year average until the second half of 2018 - seasonally lower demand during winter months suggests that the destocking process will take a breather in the first quarter. In that case, real progress will not begin until probably the second quarter of 2018. At the same time, forecasts for the prices are quite optimistic. Oil market data from OPEC and International Energy Agency are due to issue next week and would define further trend.

    We expect bunker prices may demonstrate slight irregular changes 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 February 18

09:24 Hapag-Lloyd increases rates from Finland, Russia, Baltic States, Sweden, UK to East Asia (incl. Japan)
09:21 Preparing to define the Baltic Sea’s significant marine areas
09:19 Prime Minister Shri Narendra Modi inaugurates the Fourth Container Terminal of JNPT in Mumbai
09:14 Holland America Line to launch New EXC In-Depth Voyages

2018 February 16

18:06 CMA CGM announces FAK rates from the Indian Subcontinent to North Europe and the Mediterranean
17:54 Future Outlook Forum will take place on 20 March as part of Intermodal Asia 2018
17:36 Global Container Terminals orders 10 more Konecranes RTGs for its terminals in British Columbia
17:09 University of Kent partnership helps the Port of Dover cut queues and boost efficiency
17:06 Port of Oakland reports 2.1 percent increase in export volume in January 2017
16:58 Container throughput of port Hong Kong (China) up 9.2% to 1.81 million TEUs in January 2018
16:35 Royal Vopak expands Vopak tank terminal (JTT) in the Port of Jakarta - Indonesia
16:05 DP World signs agreement with government of Jammu and Kashmir at World Government Summit
15:53 Murmansk Sea Fishing Port handled 11,600 t of fish in January 2018, up 26.1% Y-o-Y (photo)
15:26 Cargo traffic through NSR in 2017 grew by 36% Y-o-Y to 9.9 mln t
15:25 PPR 5 agrees on the outline of IMO draft guidelines for implementation of the 2020 sulphur limit
15:01 NOVATEK to invest USD 1.5 billion in construction of LNG terminal at Kamchatka
14:37 Rosmorport announces tender for maintenance dredging at Volga-Caspian Canal
14:14 22 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on February 15-16
13:49 TransContainer’s net income in 2017 more than doubled Y-o-Y to RUB 5.42 million
13:25 Nuclear power plant of Vaygach icebreaker breaks Arktika’s record
12:30 Rosmorport appoints Irina Egorova as Chief Accountant of its Vanino Branch (photo)
11:56 BSM and Babcock International Group collaborate on innovative LNG Supply Vessel
11:23 EBRD supports efficient grain logistics in Ukraine
11:00 WFS, Marinvest, IINO, Mitsui, NYK to build four new ocean-going vessels capable of running on methanol
10:28 Research vessel Admiral Vladimirsky leaves Mumbai port, India
10:00 Port of Rotterdam container throughput up 12.3% in 2017
10:00 Brent Crude futures price up 0.51% to $64.66, Light Sweet Crude – up 0.54% to $61.67
09:39 New DNV GL class notations aim to improve stern tube bearing performance
09:34 Bunker prices continue going down at the Port of Saint-Petersburg, Russia (graph)
09:15 Baltic Dry Index down to 1,089 points

2018 February 15

18:27 Largest vessel to call at The Port of Philadelphia arrives from the West Coast of South America
18:06 Ampelmann gangway system installed succesfully on the Wagenborg Offshore's Walk to Work vessel
17:06 CMA CGM announces FAK rates from North Europe to China & Far East
16:57 Bunker market in anticipation of upward correction
16:38 Container throughput drives growth in Rotterdam
16:05 Caterpillar Marine announces upgrades to reman models in commercial and yachting applications
15:57 Kont to build 4 cruise terminals in the Leningrad Region
15:24 Number of maritime accidents in North Sea Canal Area down in 2017
15:04 LUKOIL's hydrocarbon production in 2017 up 2.4% Y-o-Y to 2.23 million boe per day
14:39 Peresvet and Oslyabya, ships of RF Navy’s Pacific Fleet, sail in training zone in Sea of Japan
14:16 UN Environment visits IMO
13:43 Jan De Nul to install wind turbine generators in Germany
13:12 Seaborne cargo throughput in Hamburg was stable Y-o-Y at 136.5 million tons
12:25 Railway infrastructure management issues of importance to Lithuania discussed with EU Transport Commissioner
12:01 ClassNK releases new PrimeShip-HULL (HCSR) software
11:44 Repair of tanker "President Heydar Aliyev" of Azerbaijan Caspian Shipping Company completed
11:17 Fuel oil prices are going down at the Far East ports of Russia (graph)
11:17 RIKON AS plans to launch manufacturing of mobile cranes in the Port of Riga
10:53 18 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on February 14-15
10:26 Posidonia 2018 to host international unveil of industry titans JV – International Maritime Industries
10:02 Brent Crude futures price up 0.81% to $64.88, Light Sweet Crude – up 1.14% to $61.28
09:40 Sailors of RF Navy’s Caspian Flotilla start training for Sea Cup 2018
09:18 Baltic Dry Index up to 1,095 points

2018 February 14

18:14 Tilbury2 examination process begins
17:51 PortXL selected port related start-ups and scale-ups for 2018
17:25 The Finnish Supreme Court did not grant the leave to appeal on the fairway dues dispute between Finnlines and the Finnish State
17:03 Documentation for maintenance dredging at Kavkaz and Taman ports obtains state environmental approval (photo)
16:44 PTP enforced FAS decision on the appeal of Baltic Sea Tug Agency
16:25 CMA CGM announces PSS from North Europe to Canada East Coast
15:52 Rosmorport target classroom opens at Admiral Makarov State University of Maritime and Inland Shipping