• 2018 March 15 17:02

    MABUX: global bunker market still in 'wait-and-see' mood

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes changed irregular during the week. Another U.S. crude oil inventory increase as well as some fears about U.S. steel tariffs, and follow up possible protectionist measures, weighed on fuel sentiment. Meantime, news that Trump would allow some exceptions to the tariffs, his decision to replace Secretary of State Tillerson with loyalist CIA Director Mike Pompeo (an outspoken critic of Iran), a strong U.S. jobs report and Libya’s temporary crude outage rendered momentum support to fuel prices.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated again insignificant irregular changes in the period of Mar.08 – Mar.15:
        
    380 HSFO - up from 352.57 to 354,93 USD/MT     (+2.36)
    180 HSFO - up from 392,57 to 395,00 USD/MT     (+2.43)
    MGO         - down from 603.36 to 602,29 USD/MT (-1.07)


    It is expected that over the next 25 years, the oil industry will need another $25 trillion in investment just to meet expected demand. The sentiment came after the International Energy Agency (IEA) warned that the oil market will be short on supply in the 2020s without an in-crease in upstream spending. The conclusion is that the oil market could be well-supplied in the near-term because of U.S. shale, but faces supply risks in the early- to mid-2020s because of low upstream investment.

    Total OPEC production dropped to 32.14 million barrels per day in January, a 9-month low. That was largely the result of a sharp decline in output from Nigeria and Venezuela.

    Meantime, there is a possibility that OPEC’s oil production cut agreement could be closed rather soon due to new confrontation between Saudi Arabia and Iran. This time the dispute centers on exactly what price the cartel should be targeting. Saudi Arabia insisted that crude oil should be kept closer to US$70 a barrel—a level Brent touched briefly early this year—and Iran’s equal insistence is that US$60 is a better price for oil to trade at. The problem is that U.S. drillers have demonstrated that they could produce more at US$60 a barrel, so bringing prices closer to that level is not a guaranteed way to compensate U.S. oil production growth. This dis-agreement between Saudi Arabia and Iran could see the cartel start unwinding the cuts as early as June, when it will meet with its partners to discuss progress and next steps.

    A labor strike at the Zawiya oil port in Libya delayed operations on Mar.12. The port was opened only a day later. The past week has also seen the signs of instability in the Libyan oil sector: crude oil production at Sharara was briefly suspended after the pipeline that feeds the crude from the field to the Zawiya terminal was blocked. Last month, protests also shut down most production from another field, El Feel (as of the start of this month it produced just 25,000 bpd, down from 75,000 bpd before oilfield guards began their protest). The civil war in the country undermined its oil industry. Libya produced 1.6 million barrels of crude daily before the war, but less than 1 million bpd currently – the factor which supports price indications at the moment.

    The U.S. President Donald Trump has officially imposed tariffs of 25% on steel imports and 10% on aluminum imports which could spark inflation and provoke retaliation from U.S. trade partners. Major powers including the European Union and China have already warned that the Trump administration's new protectionist import tariffs could lead to retaliatory action, triggering a global trade war that could bring economic growth to a standstill. This would, by ex-tension, drag down oil consumption.

    Meanwhile, strong U.S. jobs data at the end of last week helped take the edge off market’s concerns about the potential outbreak of trade war between the United States and other major economies. U.S. nonfarm payrolls data which showed a significant 313,000 rise in jobs, but also revealed that annual growth in average hourly earnings had slowed to 2.6 percent after spiking in January.  This suggested that the world’s largest economy is experiencing a high growth without a corresponding spike in inflation.

    Donald Trump fired Secretary of State Rex Tillerson on Mar.13 after a series of public rifts over policy on North Korea, Russia and Iran, and replaced him with loyalist CIA Director Mike Pompeo. Pompeo is an outspoken critic of Iran, who has called for a 2015 nuclear deal to be scrapped. Trump has threatened to withdraw from the accord between Iran and six world powers, signed before he took office, unless Congress and European allies fix it with a follow-up pact. The move increases the odds of confrontation between the U.S. and Iran, although Pompeo still needs to be confirmed by the Senate.

    Fuel markets were also mainly affected by soaring output from the U.S., which has risen by 23 percent since the middle of 2016, to 10.381 million barrels per day. Another 3-rig increase to the number of oil and gas rigs was reported in the U.S. last week as well. Despite the overall in-crease, the number of oil rigs in the United States decreased by 4 last week, for a total of 796 active oil wells in the US—a figure that is still 179 more rigs than this time last year.

    As a result, U.S. oil production has already surpassed that of top exporter Saudi Arabia and is expected to surpass that of top producer Russia by 2019. This would pose a significant challenge for the OPEC, which has been trying to prop up oil prices by cutting output. Unlike Middle East producers (where output is largely dictated by state-owned oil companies), U.S. producers drill and sell purely based on economics. It is expected, that the correlation between the U.S. oil production and the oil prices will remain considerable.

    One more factor: hedge funds have resumed liquidating their bullish long positions in crude oil and refined fuels amid more signs that the earlier rally in prices has slowed down.  The reduction largely reversed an increase of 68 million barrels the previous week. Meantime, long positions still outnumbered short positions by a ratio of 10:1, down from a peak of almost 12:1 in January. With so many long positions already established oil prices have struggled to rise further in recent weeks. Instead the market has seen a slow but steady liquidation with existing longs cut by a total of almost 250 million barrels since Jan. 23. It remains uncertain whether this is merely a pause and the price rally will resume shortly, or whether it marks a temporary peak, with more liquidation and price falls to come.

    We expect bunker prices will continue 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 December 16

13:21 Traxens trials IoT network in port environment for first time, at MSC Terminal Valencia
12:32 Executives must watch both sea and air amid trade war tensions, warns Xeneta
10:55 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
10:11 PGNiG receives third spot delivery of US-sourced LNG at Świnoujście

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