• 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 September 21

18:06 Forth Ports wins prestigious award for community work
17:44 NCSP Group's cargo turnover for January–July 2018 totaled 82,351 thousand tons
17:28 First ISO-container ever loaded with liquefied natural gas at the LNG terminal in Świnoujście
17:06 Gibdock, RSP Systems and New Zealand fisheries choose LR
16:31 Outlook for marine cargo insurance challenging but opportunities remain for underwriters, says IUMI
16:04 Babcock ecoSMRT receives LR acknowledgement for ship application
15:09 Trafigura holds naming ceremony for first of 35 newbuild crude oil and product tankers
14:56 IBIA takes part in SIBCON 2018
14:27 Krasnoye Sormovo shipyard launches Pola Fiva, fifth dry cargo carrier of Project RSD59 built for Pola Rise
14:09 British International Freight Association fumes over sulphur surcharge
13:52 Ukraine’s water transport carried 0.5 million passengers in 8M’18, up 10.5%, Y-o-Y
13:31 Maersk’s regional carriers go to market under one brand
13:09 GE Shipping takes delivery of Secondhand Very Large Gas Carrier “ Jag Vasant ”
12:50 ABP aims for frictionless trade with blockchain
12:28 Cargo transportation by Ukraine’s water transport declined by 1.9% to 3.6 million tonnes in 8M’18
12:09 COSCO SHIPPING Tanker (Dalian) takes delivery of 319,000 dwt Mt Cosnew Lake
11:07 Odfjell finalizes sale of Rotterdam tank terminal
10:36 ABP promotes South Wales ports as cruise destinations
10:07 Georgia Ports plan 8 million TEU capacity by 2028
09:54 Brent Crude futures price up 0.06% to $78.75, Light Sweet Crude – up 0.14% to $70.22
09:35 Bunker prices are going up at the Port of Saint-Petersburg, Russia (graph)
09:16 Baltic Dry Index is up to 1,396 points
09:03 APL’s Eagle Express service makes a solution for precise logistics management
08:07 Yang Ming to upgrade China-Vietnam-Thailand service
07:20 Iskes Towage names twin Damen ASD Tugs 3212 Mars and Mercurius

2018 September 20

21:17 Expert says production declines and geopolitical unrest may push bunker prices up
18:02 SITC holds naming & delivery ceremony for M/V “SITC TOYOHASHI”
17:54 Sovcomflot participates in Eastern Economic Forum’s business programme
17:30 Kurt Bodewig appointed as new European Coordinator for Motorways of the Sea
17:07 Port of Singapore holds annual multi-agency ferry emergency exercise
16:46 IAPH regional conference sets pan-African ports agenda
16:25 UAE to host Dubai Marine Insurance Conference 2018 on November 20-21
16:07 Governments of New Zealand and Australian announce fumigation requirement for import cargos
15:48 Sovcomflot is a Partner of the Second Conference “LNG Fleet and LNG Bunkering in Russia”
15:32 NYK product tanker rescues 28 fishermen off the coast of Colombia
15:04 CMA CGM announces GRR from Asia to West Africa
14:56 Admiralteiskie Verfi launches the Kronshtadt, diesel-electric submarine of Project 677
14:32 DNV GL releases autonomous and remotely operated ship guideline (UPDATE)
14:04 Port of Long Beach awarded $4.2 mln security grant
13:32 ABS supports innovative yacht design with dedicated guidance notes and software
13:20 Finnish Transport Agency: international seaborne transport volumes show significant boost
13:04 Port of Antwerp works on structural solutions to improve mobility
12:43 Arctic group of RF Navy’s Northern Fleet enters Chukchi Sea through Bering Strait
12:30 Wison receives AiP from LR for 300MW FSRP
12:04 Port of Rotterdam and Rönesans Holding sign agreement for petrochemical industrial zone in Turkey
11:49 IMO to start consideration of legal framework for low-flashpoint diesel
11:30 Gulftainer signs 50-year, $600 million concession to operate and expand Port of Wilmington in Delaware, USA
11:18 Fuel oil prices are going up the Far East ports of Russia (graph)
11:04 Green Corridor JIP delivers innovative bulk carrier designs for a low emissions future
10:55 IMO takes important step to facilitate use of methanol
10:30 HHI receives AiP from LR for a VLGC design capable of using LPG as fuel
10:19 Brent Crude futures price up 0.3% to $79.64, Light Sweet Crude – up 0.61% to $71.2
10:03 OpenIJ starts sinking operation of the lock gate chamber at the Port of Amsterdam
09:50 Passenger Port of Saint-Petersburg ("Marine Façade") welcomed MSC Meraviglia
09:34 CMA CGM announces GRR from India to East Africa
09:17 Baltic Dry Index is up to 1,373 points
09:03 Port of Rotterdam organises information meeting about the replacement of Maaskade quay wall
08:34 DNV GL launches revised design standard and new certification guideline for floating wind turbines
08:04 ABS issues AIP for Jiangnan’s LNG Jumbo

2018 September 19

18:10 Significant reserve growth confirmed at the Utrenneye field