• 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 July 16

15:32 Maersk Drilling secures two contract extensions in the North Sea
15:19 Container throughput of port Hong Kong (China) down 3.6% to 9.88 million TEUs in Jan-June’18
15:03 Van Oord will acquire MPI Offshore
14:44 Average wholesale prices for М-100 HFO down to RUB 17,589 in RF spot market
14:35 Wärtsilä to assist Transocean with thruster maintenance optimisation and dry-docking cost reductions
14:25 Jan De Nul Group acquires part of MPI’s offshore business unit
14:11 Fednav accepts delivery of MV Federal Dee, its 60th owned vessel
13:46 Eastern Shipbuilding inks contract with Bisso Offshore for RApport 2400 Ship Handling Tug duo
13:27 Azerbaijan Caspian Shipping Company’s fleet is involved in a new international project
13:07 Court dismisses EUR 9 million claim against Armada Seismic Invest II AS
13:06 Hong Kong will host ShipTek Ship Owning & Ship Management Conference & Awards on 30 August 2018
12:48 Marine Recruiting Agency takes on a project of training crane specialists in Estonia
12:23 SEACOR Holdings announced that it favors a business combination of Dorian LPG LTD. and BW LPG Limited
12:02 IMO head highlights key maritime issues during trip to China
11:46 Rosmorport appoints Igor Glukhov as Deputy Director for Navigation Safety of its Far East Basin Branch
11:25 Fincantieri contracted to build LNG-fueled pair for TUI Cruises
11:01 Baltic Dry Index up to 1,666 points
10:44 Brent Crude futures price down 0.5% to $74.96, Light Sweet Crude – down 0.64% to $69.5
10:25 Mexico benefits from IMO training on port security
10:02 IMO held port emissions training for Argentina
09:52 CMA CGM's FAK rates for Asia to Red Sea trades
09:40 Bunker sales at the port of Singapore in HI’18 up 1.7% Y-o-Y to 25.35 million tonnes
09:18 Port of Singapore throughput in HI’18 grew by 0.8% Y-o-Y to 312.79 million tonnes

2018 July 15

11:24 MAN Energy Solutions ready for SMM 2018
10:43 CMA CGM informs of FAK rates from the Indian Subcontinent to North Europe and the Mediterranean

2018 July 14

12:40 CMA CGM announces GRR for Far East to East Africa trade
11:41 ABP: Container terminal operation expansion to meet growing demand
10:14 Navtek selects Corvus Energy to provide battery for the world's first all-electric tug

2018 July 13

18:50 YILPORT Holding submits offer for Taranto Container Terminal concession
18:12 Metal Shark and ASV Global introduce “Sharktech” Autonomous Vessels
17:48 ABP: £2.7 million lock gate project secures future of Newport docks
17:16 Golar LNG Partners completed acquisition of equity interest in Golar Hilli, owner of FLNG Hilli Episeyo
16:48 Total closes acquisition of Engie’s upstream LNG business and becomes world No2 LNG player
16:36 Norwegian Cruise Line confirms options for two more Leonardo-class cruise ships
16:25 Russian Minister of Natural Resources and Environment Dmitry Kobylkin visited SCF headquarters
15:59 Upgraded vessels of Project 14200 started navigation on passenger routes in Ob-Irtysh basin
15:33 Draft law on closed zones for dry bulk cargo transshipment submitted to State Duma (document)
15:12 Wärtsilä signs a EUR 170 million scrubber deal
14:37 Draft law on development of cruise tourism in Russia’s Arctic and Far East submitted to State Duma
14:24 Weatherdock AG offers fishing sector a solution to support the fight against IUU
13:49 Damen supporting European shipbuilding with NAVAIS coordination
13:11 USCG postpones underwater assessment of WWII tanker Coimbra
12:40 A £2.7 million lock gate project secures future of Newport Docks
12:11 Hapag-Lloyd to apply season surcharge for NEC to WCSA trade
11:49 London will host 9th Maritime Salvage & Casualty Response Conference on 12-13 September 2018
11:27 Hapag-Lloyd's PSS for North Europe - Caribbean, Central America trade
11:03 Throughput of port Kaliningrad in 6M’18 up 9% Y-o-Y to 7.20 million tonnes
10:38 Brent Crude futures price down 0.24% to $74.27, Light Sweet Crude – up 0.07% to $70.38
10:24 Hapag-Lloyd to apply Peak Season Surcharge for North Europe - ECSA trade
10:00 Bunker prices are going down at the Port of Saint-Petersburg, Russia (graph)
09:36 Throughput of port Tallinn (Estonia) up 1.4% to 10.09 million tonnes in HI’18
09:17 Baltic Dry Index up to 1,632 points

2018 July 12

18:21 Port of Los Angeles partners with Port of Antwerp to host simultaneous int'l "Hackathon"
18:09 DP World reiterates Validity of Doraleh Container Terminal Concession and Exclusivity Rights
18:03 High volatility in global bunker market, expert says
17:59 Throughput of port Vyborg in 6M’18 up 28% Y-o-Y to 781,200 tonnes
17:36 Maersk Supply Service completes tow of semi-submersible
17:19 Hapag-Lloyd announces port call change of Mediterranean Canada Service (MCA)
17:10 Throughput of port Primorsk in 6M’18 down 15% Y-o-Y to 26.76 million tonnes
16:45 Zelenodolsk Plant Named After M. Gorky lays down yet another small-size missile ship of Project 21631 for RF Navy