• 2018 January 18 16:02

    MABUX: Bunker prices wait for the new market catalysts

    The Bunker Review is contributed by Marine Bunker Exchange

    Last week did not bring any firm trend for world fuel indexes. A production-cutting pact between the Organization of the Petroleum Exporting Countries, Russia and other producers has given a strong support to oil prices, with both benchmarks hitting levels not seen since December 2014. Growing signs of a tightening market after a three-year rout have bolstered confidence that fuel prices can be sustained near current levels. Meantime, the further trend’s forecast is rather contradictive: some see more room on the upside with outages in key oil producing countries, strong demand expected this year and ongoing declines in inventories. But others believe the rally has gone too far and there will be a reaction in U.S. shale very soon.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) went slightly down in the period of Jan.12 – Jan.18:
        
    380 HSFO - down from 373.14 to 371,93 USD/MT (-1.21)
    180 HSFO - down from 413,64 to 412,36 USD/MT (-1.28)
    MGO         - down from 635.21 to 634.79 USD/MT (-0.42)


    There is a variety of scenarios on how the deal of the OPEC and non-OPEC production cuts of 1.8 million barrels per day (bpd) might come to an end, featuring civil unrest in Venezuela and Iran that may lead to supply disruptions; Russia pulling out of the pact in June; OPEC members and other parties to the deal starting-or continuing-to cheat; and oil prices rising too high.

    At the moment Russia may be already on its way out of the OPEC output reduction deal. Russian Energy Minister Alexander Novak may discuss the country’s potential exit from the pact in Oman next week. As per Russia, the market is becoming balanced and the surplus is decreasing, but the market is not completely balanced yet. It needs to be monitored before the decision is made.

    In addition to the OPEC+ pact, fuel prices have found support from eight consecutive weeks of U.S. crude inventory drops. U.S. commercial crude stocks fell by almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels. That was slightly below the five-year average of just over 420 million barrels, the target for OPEC and others cutting output.

    Despite the oil price rise, US crude oil production dipped last week. It had been on a steady up-ward trajectory during Q4 2017. But the first week of 2018 saw production in the United States slipping from 9.782 million bpd in the last week of 2017, down to 9.492 million bpd.  The number of active oil and gas rigs on the contrary rose last week, increasing by 15 total rigs, bringing the total rigs to 939, which is an addition of 280 rigs year over year. The number of oil rigs in the US increased by 10 and stands at 752 versus 522 a year ago.

    The EIA sharply revised up its forecast for U.S. oil production this year and next, predicting aver-age output of 10.3 million bpd in 2017 (up nearly 300,000 bpd from last month’s forecast) and 10.8 million bpd in 2019. The EIA predicts that by November 2019 the U.S. could hit 11 million bpd, surpassing Russia as the world’s largest producer. The strength of U.S. shale is one of the main pressure factors on the fuel market, but it remains to be seen if shale drillers can achieve such high production levels.

    U.S. President Donald Trump extended sanctions relief granted to Iran under its 2015 nuclear deal with the United States and other world powers. However, Trump, who has vowed to scrap the pact, was expected to give the U.S. Congress and European allies a deadline for improving it. Without improvements, Trump would renew his threat to withdraw from the agreement. Iran in turn said its nuclear program is only for peaceful purposes. It has also said it will stick to the accord as long as the other signatories respect it, but will decline the deal if Washington pulls out. The U.S. Congress requires the president to decide periodically whether to certify Iran’s compliance with the deal and issue a waiver to allow U.S sanctions to remain suspended.  The forecasts have projected U.S. sanctions could threaten several hundred thousand barrels per day of Iranian oil production, but unilateral action from Washington won’t be as effective as the coordinated international sanctions from years ago.

    China imported 12 percent less crude oil in December than in November, when crude imports had hit a record high, sparking immediate concern about demand from one of the world’s top consumers. The record-high November oil shipments to China were stockpiled, and used by refiners during the last month of the year. Despite the December drop, for full-2017, crude oil import figures reveal a 10.1-percent increase from 2016, at 8.43 million barrels daily. Besides, the first lot of oil import quotas issued by the government last month (121.32 million tons) is also high enough to suggest a rebound in oil imports this year as quotas were 75 percent higher than the first allocations for 2017. China is now the world’s biggest oil importer, overtaking the United States for the first time ever.

    India’s oil demand in turn grew at its slowest pace in four years in 2017 at only 2.3 percent. Slower car sales, new taxes, and a campaign by the central bank to remove certain currency notes hit retail and wholesale markets – these factors weighed on India’s fuel consumption. India has long been billed as one of the most important growth markets for global fuel demand, but it continues to lag behind expectations.

    In Colombia, the National Liberation Army (ELN) is reported to be restarting its militancy against state forces and oil infrastructure after the end of a critical ceasefire to facilitate talks that would end 53 years of war. As a result, Transandino pipeline stopped operating on Jan. 14 after a bomb planted by ELN rebels caused a crude spill into a nearby river. 20% of government revenues in Colombia come from the exploration, production, and taxation of petroleum products in the country, but three years of low oil prices have lowered that proportion to almost zero.

    Meantime, oil production in Venezuela has jumped to nearly 1.9 million barrels per day, suggesting the Latin American nation’s output recovers despite a lack of access to global credit markets. Venezuela’s November production was 1.834 million bpd. However, U.S. newest sanctions prevent Venezuelan oil Companies from repatriating any earnings from the U.S. They also make it impossible to access American credit markets, forcing Venezuela to seek deals with Russia and China to refinance crippling amounts of debt.

    The start of 2018 was not so active on global fuel market while the fuel indexes still remained underpinned by tightening supply and strong global demand. We expect bunker fuel prices may stay steady 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)




2019 January 21

09:40 Throughput of port Kaliningrad in 2018 grew by 2% Y-o-Y to 14.05 million tonnes
09:19 Baltic Dry Index is up to 1,112 points

2019 January 20

16:08 Subsea 7 acquires multi-purpose offshore construction and dive support vessel
15:03 TEPCO and Ørsted sign MoU to work jointly on offshore wind projects
13:51 Major contract for JSS awarded to Montreal-based company
12:42 Huntington Ingalls Industries to acquire Fulcrum IT Services
10:47 Algoma provides update on status of fleet renewal

2019 January 19

16:19 Ocean Yield acquires Suezmax tanker Milos for $56.0 million
15:16 Evac expansion continues with acquisition of UK service company Transvac Systems
14:02 Deltamarin contracted to continue with Titanic II project
12:51 SGRE launches 10 MW offshore wind turbine
11:44 Algoma increases its interest in the ocean self-unloader Pool

2019 January 18

18:06 North Carolina Ports sets new record in 2018
17:47 Freight turnover of Neva-Metal (Saint-Petersburg) in 2018 climbed by 3% Y-o-Y to about 3.2 million tonnes
17:25 Okskaya Sudoverf obtains patent for state-of-the-art pontoons
17:06 Hamburg prepares for ‘Hard Brexit’
16:44 Throughput of port Primorsk in 2018 fell by 7% Y-o-Y to 53.48 million tonnes
16:23 GTT receives a new order from SHI to design the tanks of two LNG carriers on behalf of Gaslog
16:20 NOVATEK elects new Board of Directors
15:56 Throughput of port Vyborg in 2018 grew by 25% Y-o-Y to 1.93 million tonnes
15:33 Stena Line’s first new generation ferry ‘floats’ in China
15:21 Bunker sales at the port of Singapore in 2018 fell by 1.7% Y-o-Y to 49.8 million tonnes
15:03 Panama Direct service CMA CGM to resume weekly rotations
14:47 Throughput of port Vysotsk in 2018 climbed by 7% Y-o-Y to 18.79 million tonnes
14:33 GranIHC appointed contractor for Equinor’s Peregrino Phase II Project
14:19 Port of Ust-Luga handled 98.72 million tonnes in 2018, down 4% Y-o-Y
14:03 Algoma Central Corporation increases its interest in ocean self-unloader Pool
13:50 18 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 17-18
13:35 Throughput of the Port of St. Petersburg in 2018 up 11% Y-o-Y to 59.32 million tonnes
13:18 CMA CGM unites its Containerships and MacAndrews brands
13:11 Vladimir Putin supports Government’s proposal on expanding Far East Ministry’s functions with Arctic issues
12:49 Throughput of port Kavkaz in 2018 grew by 11% Y-o-Y to 49.276 million tonnes
12:26 MV Werften purchases Neptun Ship Design
12:08 Sakaide shipyard holds naming ceremony for new LNG carrier jointly owned by NYK and JERA
11:38 PGNiG SA signs agreement for oil and gas exploration and production in UAE
11:14 Remote pilotage to be allowed in Finland
10:47 Free zone status is a crucial advantage for the future development of the Freeport of Riga
10:06 Ice restrictions at the port of Ust-Luga come into effect on January 31
09:42 Brent Crude futures price up 0.9% to $61.73, Light Sweet Crude – up 1.09% to $52.64
09:20 Baltic Dry Index is up to 1,077 points

2019 January 17

18:13 PORT OF KIEL presents annual results 2018
17:51 Ice restrictions at the port of Primorsk come into effect on January 25
17:28 Global Ports sets up a common service call centre
17:09 EFIP welcomes and supports the European Parliament position on the Connecting Europe Facility for 2021-2027
17:05 North Sea Port monitoring the Brexit closely
16:44 ABP invests £700K to boost storage at Port of Ipswich
16:27 Global fuel market: still many uncertainties in both demand and supply
16:22 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
16:05 OCEAN Alliance extends duration of OCEAN Alliance to ten years
15:42 COSCO SHIPPING Ports signs agreement with PSA to add two new berths at the terminal in Boao, Hainan
15:31 Liebherr supports the 6th International Forum of Dredging Companies as its Sponsor
15:02 Ocean Yield ASA agrees to acquire a modern Suezmax tanker for a consideration of USD 56.0 mln
14:02 SEACOR Marine enters agreement to acquire three additional platform supply vessels from affiliates of COSCO Shipping Group
13:49 Throughput of Chinese ports grew by 4.2% to 9.22 billion tonnes in 2018
13:32 Jensen Maritime provides design for Shaver Transportation’s new tugboat
13:14 OOCL rolls out third phase of Ocean Alliance product refinements
12:50 Baltic Ports Organization’s schedule for 2019 is set
12:38 Port of Los Angeles breaks all-time cargo record in 2018
12:26 Qatar accedes to load lines convention
12:01 Sunseeker International and Rolls-Royce to present first production yacht with MTU hybrid power in 2020