• 2018 January 11 16:12

    Bunker prices may continue upward trend supported by geopolitics

    The Bunker Review is contributed by Marine Bunker Exchange

    World fuel indexes rallied in the first weeks of 2018, supported by increased geopolitical risk and severely cold weather in the eastern U.S. But the risk of the correction also rose. On the demand side, expectations are that global economic growth will support solid oil demand growth. On the supply side, Venezuela’s dire situation, possible new sanctions on Iran, and increased tension in the Middle East mostly with the Saudi-Iran issues and the Iraq-Kurdistan standoff may take more volumes off the market than OPEC+ plans.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated insignificant irregular changes in the period of Jan.04 – Jan.11:
        
    380 HSFO - down from 375.93 to 373,64 USD/MT (-2.29)
    180 HSFO - down from 416,57 to 413,86 USD/MT (-2.71)
    MGO         - up from 630.64 to 634.36 USD/MT       (+3.72)


    It is expected that the return of geopolitical risks to the fuel market will be the major driver of potentially higher prices this year. A recent round of protests in Iran rose concerns that violence will roll over onto prized oilfields, but the government has largely preempted this scenario. President Hassan Rouhani believes the protests were spurned by his orthodox political opponents who sought to deny Rouhani any progress on personal liberties on the domestic front. Anyway, Iran’s Revolutionary Guard officially put an end to over a week of deadly protests in the country on Jan.07, though social media apps continue to be banned.

    Meantime, in a few days U.S. President may try to re-impose sanctions on Iran, a step that will certainly lead to more tension between the two countries and could increase sup-porting factor to fuel prices. Meantime, the Trump administration won’t have the backing of the international community in its anti-Iranian campaign, which will make isolation much more difficult. Goldman Sachs predicted that unilateral sanctions from the U.S. could affect a few hundred thousand barrels per day from Iran, but without help from the rest of the world, the effort would not curtail nearly the same amount of oil as the last time around. Besides, the increased threat of renewed U.S. banking/USD sanctions on Iran alone is likely to boost Iran’s interest in the new Yuan oil contract, and China will benefit considerably from such developments.

    OPEC produced 32.47 million bpd in December, essentially flat from a month earlier. Some notable declines came from Libya (pipeline outage), Saudi Arabia and Venezuela, while Nigeria boosted output. OPEC’s compliance rate for December stood at 121 percent, the same as November.

    Libya’s oil revenues nearly tripled in 2017 to US$14 billion (from US$4.8 billion in 2016) as the country managed last year to gradually recover its oil production, reaching 1 million bpd for the first time since 2013. Libya’s oil revenues represented more than 86 percent of its total income last year. After the main fields and oil export terminals in Libya re-opened in 2017, production started to increase and, together with Nigeria’s recovering oil production and U.S. shale resurgence, was offsetting part of the OPEC cuts and depressed fuel prices for much of 2017.

    Iraq plans to start exporting of up to 60,000 barrels per day to Iran from its northern Kirkuk oil fields by the end of January. The deliveries are to be made under a swap agreement announced in December by both countries. The shipment of oil from Kirkuk has been halted since Iraqi forces took back control of the oil fields from Kurdish forces in October.

    Venezuela’s oil output fell by another 100,000 bpd in December, dipping to just 1.7 million bpd, the lowest level since 2002. The drop off is steeper than prior monthly losses, and raise fears of an accelerated decline in 2018. That could lead to the cartel agreeing that re-stricting supply is no longer appropriate in a market that is significantly tighter than before the cuts started.

    The U.S. Energy Information Administration (EIA) in its Short-Term Energy Outlook for January predicts world oil demand in 2018 is set to grow by an additional 100,000 barrels per day. The forecast also said that the 2019 demand figure would stand at 101.76 million bpd—an increase of 1.65 million bpd from the current year. As per EIA, U.S. crude oil production is forecast to average 10.3 million bpd in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million bpd set in 1970. EIA forecasts U.S. production to increase to an average of 10.8 million bpd in 2019 and to surpass 11 million bpd in November 2019. There is high probability, that the oil market balance will not be achieved before late in the second half of 2018, as U.S. shale and growing supply from other non-OPEC producers (not part of the OPEC+ pact) will offset some of the cartel and allies’ production cut.

    The Trump administration has proposed to open up vast new territory for offshore oil and gas drilling, going so far as to push drilling in areas currently off limits. They include the Atlantic, Arctic and Pacific Oceans, as well as parts of the Gulf of Mexico. The five-year plan for 2019-2024 would replace the Obama-era plan for 2017-2022, and it would include 47 possible auctions that encompass more than 90 percent of the U.S. outer continental shelf. The proposal will take time to finalize and would be vulnerable to legal challenges.

    Russia is going to start moving more Urals crude eastward right after the launch of the East Siberia-Pacific Ocean pipeline extension, at a rate of 160,000 bpd. The overall increase of Russian crude shipments to China could be around 200,000 bpd. This means less oil for Europe, which is Russia’s number-one oil client. In 2016, Russia exported an average 3.7 million barrels daily to European countries, compared with less than a million bpd to China. The proportion could change drastically very soon, which may set up another round of rally for oil and fuel prices in Europe.

    Earnings for supertankers that move oil around the world fell by more than half in 2017, in large part because of the OPEC cuts. The number of cargoes from the Middle East to Asia reduced significantly at a time when a large number of newly-built vessels are being delivered. Earnings per day fell to $17,794 on average in 2017, the lowest figure since 2009. The poor conditions for the oil tanker industry are set to continue this year, with capacity expected to expand by another 4 percent at a time when OPEC will continue to hold back supply.

    In fact, market believes more of the same – inventory declines, some shale growth, a gradual increase in the oil price and eventually an end to the OPEC deal. But still a lot of uncertainty factors remain. We expect bunker prices may still continue slight upward trend in a near-term outlook.

     

     

     

     

     

     

     

    * 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 June 21

18:27 Diana Shipping announces time charter contract for m/v Philadelphia with Koch
18:00 CMA CGM announces new rotation on ASAF service
17:56 Russia is in need of small bunkering tankers, LNG bunker supply ships and bunker barges - Damen
17:31 Gate terminal (Gasunie/Vopak) to increase ship loading flow rate
16:58 Antwerp blockchain pilot pioneers with secure and efficient document workflow
16:24 Freeport of Riga Authority joins Cruise Lines International Association
16:02 Danaos Corporation announces comprehensive debt refinancing agreement
15:50 MABUX: All eyes are on what course of action OPEC will call for
15:40 12 LNG bunker supply ships to be put into operation in Singapore by 2025
15:02 Ship garbage recycling pilot wraps up at Port of Brisbane
14:39 Vyborg Shipyard launches port icebreaker Ob built for FSUE Atomflot
14:02 APM Terminals supports World Clean Air Day with App upgrade
13:41 Igor Zolotykh appointed as Harbour Master of port Ust-Luga
13:23 Victor Olersky appoints Igor Ishchenko as Harbour Master of port Primorsk
13:02 EU member states’ experts on ship recycling meet in Brussels
12:39 XI Russian Forum “Current State and Prospects for Development of Russian Bunker Services Market” opens in Saint-Petersburg
12:16 ABS issues industry-leading Guide advancing DC power for hybrid electric applications
12:00 Largest gantry crane in the Nordic countries delivered to Meyer Turku
11:57 HVCC Hamburg Vessel Coordination Center and the Rotterdam Port Authority launch unique cooperation
10:55 CMA CGM to acquire CONTAINERSHIPS, a leader in intra-regional transportation in Northern Europe
10:53 Protecting marine life from ship noise is in the focus of meeting on oceans and the law of the sea
10:28 Brent Crude futures price up 0.41% to $75.41, Light Sweet Crude – down 0.59% to $65.3
10:02 Maritime officials in Morocco undergo training at IMO workshop in Casablanca
09:41 Closer look at the interpretation of maritime law
09:19 Baltic Dry Index down to 1,373 points

2018 June 20

18:00 Lead landing ship of Project 11711, Ivan Gren, joins the fleet of RF Navy
17:33 Rosatomflot extends its winter-spring navigation period amid challenging ice conditions
17:05 Genco Shipping & Trading Limited completes common stock offering
16:05 Seatruck Ferries to use larger vessels for Warrenpoint service
15:51 Maritime leaders endorse green initiatives for shipping
15:30 Mitsui to make entry into subsea support vessel business through acquisition of shares in AKOFS Offshore
15:04 Eighty-two Crowley vessels honored with Jones F. Devlin Awards in recognition of 613 combined years of safe operations
14:59 GasLog Partners LP announces new charter agreement with Cheniere Energy
14:24 Small icebreakers of Project 22740 can be converted to run on LNG
14:05 Cheniere Energy and Cheniere Energy Partners announce definitive merger agreement
13:13 ABB brings efficiency and sustainability through system integration to two new Indian ferries
12:39 Dredging works commenced at the port of Ust-Luga
12:01 ABP Southampton publishes Air Quality Strategy with package of commitments
11:20 Bunker prices are down up at the port of Novorossiysk, Russia (graph)
11:01 Crowley adds 40 ISO tanks
10:45 Yaroslavsky Shipbuilding Plant completed the series of six boom-laying boats
10:31 GTT receives an order from Hyundai Heavy Industries to design the tanks of a new LNG carrier
10:22 Brent Crude futures price up 0.41% to $75.41, Light Sweet Crude – down 0.59% to $65.3
10:05 Euroports increases pulp & paper warehousing capacity in Tarragona, Spain
10:00 RF Government expands the list of publicly funded projects in seaports and on IWW of Russia
09:37 Bunker prices continue going down at the Port of Saint-Petersburg, Russia (graph)
09:16 Baltic Dry Index down to 1,419 points

2018 June 19

18:06 100 million dollars to link the Nile with Suez Canal Region
17:03 DNV GL partners with the EU and Government of India to bring offshore wind to the Indian market
16:32 CMA CGM deploys its innovative solution for containers tracking, TRAXENS by CMA CGM
16:18 APM Terminals ‘Cool port’ barge service speeds up distribution from Rotterdam
16:02 Multraship acquires an ASD Tug from Med Marine for Terneuzen operations
15:32 Koper remains the most important port for Austria
15:02 CMA CGM announces GRR from East Coast South America to Africa, Gulf and West Coast North of India
14:32 Port of Oakland import volume flat in May 2018
14:25 Europort Romania maintains its position as the premier Black Sea martime event
14:02 British Ports Association comments on new report on Northern ‘Free Ports’ strategy proposal
13:32 Port seeks to double rail volume with Railport Antwerpen
13:02 Rijkswaterstaat awarded Van Oord the contract to dredge Marker Wadden channel
12:32 MOL to make full-scale move into subsea support vessel business by acquiring stake in AKOFS of Norway