• 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 October 18

18:03 VSDV opens new crossdock location in the port of Amsterdam
17:33 The first vessel in Klaveness Combination Carriers next generation of combination carriers named at New Yangzi Shipyard in China
17:17 Cargo transportation via Northern Sea Route can reach 17 million tonnes in 2018
17:03 Savannah container trade up 12 percent in September 2018
16:55 PGRK: sales strategy of Pavlovskoye deposit project is focused on foreign markets
16:33 SITC Logistics Group signs strategic cooperation agreement with Chengdu Port Investment Group and Guangzhou Port Logistics Group
16:03 NYK and Horiba to develop a new sulfur-in-oil analyzer for ships
15:34 Thames freight volume rises by 40% as Thames Vision strategy starts to bear fruit
15:33 Port of Rotterdam Authority and research institute TNO present results of the study at IMO meeting
15:31 Dublin Port volumes grow by 4.7% in first nine months. By year end, 36% growth in just six years
15:03 Chinese Lingang group invests 85 million euros in Zeebrugge inner port
14:47 Practical aspects of LNG bunkering to be discussed at the dedicated conference in Moscow on October 24
14:33 Nouryon, Tata Steel, and Port of Amsterdam partner to develop the largest green hydrogen cluster in Europe
14:24 Bunker prices may change irregular next week amid rising volatility on global fuel market, expert says
14:11 Tallink and Rauma marine constructions sign letter of intent for the construction of new shuttle ferry
14:02 VesselMan and DNV GL team up to offer optimized solution for dry-docking management
13:30 Project Forward paves the way for meeting IMO’s reduction on CO2 emissions
13:14 Equinor’s share saving plan allocates shares
13:02 Damen Shipyards Group and Abu Dhabi Ports sign contract for two Damen ASD Tugs 2411
12:52 Volumes transported by TransContainer’s flatcars and containers grew by 5.1% Y-o-Y to 1.38 million TEUs
12:43 Diana Shipping announces direct continuation of time charter contract for M/V Astarte with Glencore
12:40 Damen Shiprepair Oranjewerf adds three new certifications
12:30 Vympel Shipyard launches third coast guard boat of Project 1496М1, Lamantin, for FSB Border Guard Service
12:11 Equinor focuses NCS portfolio through sale of non-core discovery
11:51 Securitas Technology BV installing cameras in the Port of Rotterdam
11:28 HII starts fabrication of amphibious assault ship Bougainville (LHA 8)
10:55 Seafarers’ mental health is focus of new training programme offered free to mariners worldwide
10:51 RF Navy’s Pacific Fleet detachment to conduct exercise East China Sea
10:13 Ulstein secures contract for design of Jones Act compliant SOV vessel
09:58 Brent Crude futures price up 0.07% to $79.99, Light Sweet Crude – up 0.1% to $67.61
09:39 Myanmar officials trained in forming maritime transport policy
09:14 Baltic Dry Index is down to 1,554 points

2018 October 17

18:03 PGNiG and Venture Global LNG announce LNG Sales and Purchase Agreements for 2 million tonnes per year
17:46 The Freeport of Riga Authority continues to develop cooperation with China
17:22 Port Manatee enjoys record fiscal year with diverse growth
17:00 North Sea Port and Titan LNG successfully supply sea-going vessel with LNG fuel
16:55 33 LNG carriers and 8 gas condensate carriers with export cargo left port Sabetta in April-June 2018
16:24 Baku International Sea Trade Port launches two new tugboats
16:02 Hapag-Lloyd announces General Rate Increase for East Asia to Mexico, Central America, West Coast of South America, Caribbean & Panama trade
15:46 New BIMCO & IBIA Bunkering Guide available
15:23 NOVATEK and Fluxys plan to build an LNG terminal in Rostock
15:02 NYK develops original software that diagnoses combustion chamber problems
14:40 RF Government allocates RUB 8.4 billion for the Far East development
14:21 Scorpio Bulkers announces time charter-out agreements
14:03 CMA CGM implements Empty Repositioning Surcharge for exports from all Turkish ports
13:32 Ørsted contracts Van Oord for cable installation Borssele I & II
13:21 Throughput of Ukraine’s seaports in 9M’18 fell by 1.7% Y-o-Y to 95.9 million tonnes
13:04 CMA CGM to introduce new BAF on Asia-Africa trade
12:30 GTT and Dongsung Finetec sign a Memorandum of Understanding
12:02 Maritime and Port Authority of Singapore and partners sign MoU for 3D printing facility and applications in maritime sector
11:53 Identifying barriers to cutting emissions through just-in-time operations
11:27 Norddeutsche Reederei H. Schuldt joins V.Group
10:50 Brent Crude futures price down 0.09% to $81.34, Light Sweet Crude – up 0.06% to $71.88
10:42 CMA CGM to introduce new BAF on Europe-Africa trade
10:37 Damen Shipyards Galati hands over 74-metre fishery research vessel to Angolan government
10:27 Maritime Arctic Competence Center opens in Saint-Petersburg
09:42 KN invests in environmental protection measures
09:20 Baltic Dry Index is down to 1,578 points

2018 October 16

18:33 Maersk Line announces new FAK rates from Mediterranean to West and Central Asia
18:03 ABS holds two seminars at the 58th Genoa International Boat Show