• 2018 February 15 16:57

    Bunker market in anticipation of upward correction

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil prices fell significantly during the week. The latest selloff is the result of both oil-specific problems as well as equity market volatility. The rebound in the dollar and the stock market meltdown have pushed down oil/fuel indexes. Meantime, the surge in U.S. shale production to over 10.27 million barrels per day (bpd) last week, plus expectations of output growth to 11 million bpd later this year, have inspired fears of a return to surplus. Those concerns were supported by a massive increase in the U.S. rig count last week:  plus 26 oil rigs, boosting the count to 791, the highest since April 2015.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) also demonstrated a steep decline in the period of Feb.08 - Feb.15:
        
    380 HSFO - down from 357.71 to 351,86 USD/MT (-5.85)
    180 HSFO - down from 395,07 to 390,79 USD/MT (-4.28)
    MGO         - down from 614.71 to 597,64  USD/MT (-17.07)


    The International Energy Agency (IEA) said in its latest Oil Market Report, that the global oil market could slip into deeper oversupply on the back of non-OPEC production growth led by the United States. At the same time, global economic growth could turn out to be stronger than previously expected and this would help offset the impact of growing U.S. production on prices. The IEA maintained its 2017 oil demand growth estimate at 1.6 million bpd and said this year demand will grow by 1.4 million bpd, a 100,000-bpd upward revision on the January Report's estimate.

    A bit earlier the EIA published its latest Short-Term Energy Outlook, in which it drastically revised its forecast for U.S. oil production, predicting the country will hit 11 million bpd by the end of 2018, a year earlier than it previously thought. Surging output threatens to push down oil/fuel prices further. The EIA sees Brent averaging $62 per barrel in 2018, and WTI to average $58.

    Goldman Sachs in turn considers that market upward movers such as global economic growth projections, the possibility of supply disruptions, and discipline among U.S. producers still remains (although there were some misgivings about the last factor). The bank also pointed out that despite market's wariness about U.S. oil production growth, long-term car sales projections for the Chinese market as well as forecasts on crude oil demand in the United States provided support to oil/fuel price optimism.

    OPEC's total crude oil production averaged 32.30 million bpd in January (down by 8,100 bpd from December) as rising production in Iraq, Saudi Arabia, and Libya did not fully offset an-other massive plunge in Venezuela's production and a small decline in Angola. Venezuela's crude oil production in January 2018 was at 1.600 million bpd, down by 47,300 bpd compared to December 2017: the largest monthly decline in oil production among OPEC's 14 member states. Among the OPEC members that raised their production, Iraq was the leader with an in-crease of 30,200 bpd in January over December, to 4.435 million bpd (higher than quota under the deal-4.351 million bpd).

    The Organization of the Petroleum Exporting Countries (OPEC) also said it expected world oil demand to climb by 1.59 million barrels per day (bpd) this year, an increase of 60,000 bpd from the previous forecast, reaching 98.6 million bpd. As per OPEC, non-OPEC supply will also rise by 1.4 million bpd this year, an upward revision of 250,000 bpd from last month's forecast. The revision is rather large and represents an acknowledgement that the cartel's efforts to limit production have allowed U.S. shale to ramp up. Cartel expects, that in the situation of non-OPEC production growth, oil markets would only return to a supply and demand balance to-wards the end of this year.

    Iran's Energy Minister said last week the country has the capacity to increase production by 100,000 bpd within five to six days of an end to the production cut deal. It was also said that there is no reason for OPEC to extend the cuts beyond June this year. The statement added pressure to fuel indexes.

    The EIA forecasts the United States will become a net oil and gas exporter by 2022: slower domestic demand, along with growth in natural gas, oil, and oil product production will drive the transformation. The report does not detail the main destinations for these exports, but China and India are both likely to be top consignees for both oil and gas. The United States will continue to import crude oil as well, as its refineries need different blends to process into fuels; the heavy grades that go into these blends are typically imported

    The budget deal that the U.S. Congress reached on Feb.07 includes the sale of 100 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) between 2022 and 2027-a total volume equal to some 15 percent of the current reserve. The budget deal also involves the sale of $350 million worth of crude oil, or some 5.7 million barrels, this year. Currently, the SPR has around 665.1 million barrels of crude oil stored in underground caverns on the coasts of Texas and Louisiana.

    Сrude oil imports to China hit another record last month, reaching 9.57 million barrels daily, for a total of 40.64 million tons. This is 400,000 bpd more than the previous record from March last year. A Rosneft pipeline began operating at an expanded capacity on January 1, which increased the flows of crude into the country. Besides, the increase in oil imports was driven by independent refiners, who rushed to utilize their higher crude oil quotas, that were 55 percent higher than last year's. It forecasts that Chinese crude oil imports will continue to grow over the next few years as the use of oil products grow along with the economic and refinery capacity expansion. The country's import dependence is also expected to grow as imports rise and production de-clines.

    China also plans to launch its crude oil futures contract on March 26: a move that will potentially influence pricing of the global fuel market. The launch is aimed at giving the country more levers in pricing crude in Asia. The move would also support China's currency and its role in the global financial system. The creation of the yuan-denominated contract was originally expected about six years ago but has run into delays as turmoil in China's stock markets and other commodity futures raised concerns about its capacity to handle financial turbulence.

    The fuel market seems poised for a price correction amid rising supplies, financial turmoil and active positioning from hedge funds in the futures market. Inventories are back close to average levels and it looks that OPEC could overshoot and tighten the market too much. But a price correction doesn't mean that the market will settle in at lower prices for a long time. Demand is rising and OPEC will likely maintain high levels of compliance with its production limits. We expect bunker prices may continue slight downward evolution next week while upward correction is rather possible in the near term.

     

     

     

     

     

     

     

     

    * 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 December 15

16:23 MOL Passenger Line receives award for outstanding performance in 'Cruise of the Year 2018'
14:53 CMA CGM to implement GRR for India East Coast-West Africa trade
13:51 CMA CGM announces LSS on services from / to China, Hong Kong and Taiwan
12:44 NYK Cruises receives Grand Prix Award for 2018 World Cruise
11:27 TT-Line places order for RoPax "green" ferry with China's Jiangsu Jinling Shipyard

2018 December 14

18:17 Hapag-Lloyd to increase rates from East Asia to Mexico, Central America, West Coast of South America, Caribbean & Panama
17:48 Petersburg Oil Terminal puts into operation its emergency response team
17:33 Vinalines to open container shipping centre next week
17:30 Fairway adjustment will simplify Elbe traffic control already next year
17:27 Final cruise ship for the year calls to the Port of Gothenburg
17:23 The MV Magda joins the Klaveness Bulkhandling pool
17:16 India’s containerised export up 10% in the third quarter of 2018
17:13 FSL Trust announces newbuilding agreement for the construction of two LR2 product tankers
17:13 Havyard project with Havila Kystruten on hydrogen-powered coastal route operations to receive over NOK 100 million in funding from Pilot-E
16:24 World Fuel Services expands bunker operations in US leading up to 2020
15:57 IMO held training workshops in Cameroon Single Window for Foreign Trade Transactions
14:49 Onezhsky Shipyard lays down self-propelled hopper barge of Project HB600
14:08 Irish Continental Group plc takes delivery of cruise ferry W.B.Yeats
13:55 WMU takes part in Ocean Literacy Conference
13:31 First in industry ADNOC co-loads LPG and propylene onto same vessel in Ruwais
13:10 WMU hosted round table discussion regarding key challenges facing IMO
12:53 Bunker market at the Port of Saint-Petersburg, Russia shows mixed price movements (graph)
12:32 Nordic American Offshore secures contract for its PSV NAO Viking
12:11 Rosrybolovstvo supports 2nd Dredging and Hydraulic Engineering Structures Congress
11:50 Association of Commercial Sea Ports celebrates its 30th anniversary
11:24 Gazprom and Itochu sign MoU under Baltic LNG project
11:06 Scorpio Bulkers announces time charter-out agreement
10:48 Domestic ferry safety exercise conducted in Indonesia
10:25 IMO holds training for managing insecurity in west Indian Ocean and Gulf of Aden
10:06 EC adds six new yards to its ‘European List of ship recycling facilities’
09:47 Brent Crude futures price down 0.61% to $61.05, Light Sweet Crude – down 0.4% to $52.37
09:25 GTT notified by HSHI for the tank design of two new LNG carriers for CMM
09:18 Baltic Dry Index is up to 1,365 points
08:06 Fincantieri publishes its Sustainability Plan 2018-2022
07:14 Port of Long Beach cargo volume up to 621,835 TEU in November 2018
06:09 Mitsubishi Shipbuilding holds christening ceremony for LPG carrier "LAUREL PRIME"

2018 December 13

18:43 Coal exports via Rosterminalugol hit 19-millionth tonne mark
18:28 Port of Kaliningrad throughput in Jan-Nov rose 4% to nearly 13 million tonnes
18:25 Tideway completes installation of longest AC offshore wind export cable at Hornsea One in the UK
17:49 Hapag-Lloyd to cancel calls at Port of Bremerhaven
17:25 Building of Johan Sverdrup Phase II begins
17:19 Port of Vyborg 11-month cargo volumes soar 24% to 1.72 million tonnes
17:13 Seabridge first in Belgium to receive the SCA certificate
17:08 Jan De Nul cleans up polluted beaches along the coast in southern France
17:07 Bunker fuel prices at Far Eastern ports close the week lower
17:00 Murmansk Region will improve water safety regulations – Marina Kovtun
16:47 Port of Vysotsk cargo volume in Jan-Nov rises 6% to 16.86 million tonnes
16:36 Maersk Broker Bulk Chartering and NAODAN Chartering
16:30 Murmansk Region Governor is a member of revised State Commission for Arctic Development Issues
16:26 YILPORT Holding wins Port Operator Award at Lloyd’s List Global Awards
16:03 Rosmorport releases RFPs for design of an DF 12/14MW icebreaker
15:49 Jotun and Kansai Paint build relationship to meet marine and protective demand
15:46 Baltic Sea Ports Authority icebreakers assist merchant vessels in the Gulf of Finland
15:21 Containerships receives its first LNG-powered container vessel
14:44 Uncertainty lingers in fuel markets despite OPEC cuts
14:17 Maersk Line receives Containership Operator of the Year award
14:13 Iran-Indonesia to develop port cooperation
13:22 NOIA: U.S. territories need the Offshore Wind for Territories Act
13:12 QPS inks first "Green Loan" with BNP Paribas
12:48 Panama Canal signs agreement with Brazil's Port of Itaqui