• 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 April 25

15:14 MOL expands its NVOCC business with the unified brand "MOL Worldwide Logistics"
15:06 BWMS manufacturers and stakeholders set up new association BEMA
14:55 Innovative Damen RSD Tug 2513 kicks-off introduction tour in Italy
14:09 Ilari Kallio appointed Chief Digital Officer at Konecranes
13:20 Nakilat records 13% increased profits for the first quarter of 2018
12:59 Philippines accedes to air pollution and energy efficiency rules
12:33 Cruise season begins at the Port of Gdansk
12:09 HELCOM progresses firmly towards reducing input of pollutants into the Baltic Sea
11:51 8,791 ships are fitted out with the GLONASS navigation equipment - Dmitry Rogozin
11:28 All seaports in Crimea will be fully equipped with GLONASS system in 2018 - Dmitry Rogozin (photo)
11:09 Keppel Offshore & Marine signs MOU with MPA and TCOMS to jointly develop autonomous vessels
10:50 LUKOIL BoD recommends dividend distribution for 2017 in the amount of RUB 215 per ordinary share
10:26 Brent Crude futures price up 0.08% to $73.8, Light Sweet Crude – down 0.13% to $67.61
10:09 WinGD wins marine propulsion Emissions Reduction Award
09:45 Bunker prices are going up at the Port of Saint-Petersburg, Russia (graph)
09:20 Baltic Dry Index up to 1,306 points
09:08 The Port of Rotterdam welcomes IMO’s first step in reducing CO2 from shipping
08:17 Keppel on track to deliver South East Asia’s first LNG powered tug

2018 April 24

18:43 GAC South Africa expands into Port Elizabeth
18:29 Summa Group and Rosneft denied holding negotiations on Novorossiysk Commercial Sea Port
17:30 Future perspectives for maritime industry to be studied at Maritime Future Summit (MFS) during SMM
17:06 PSA and GeTS to develop new global trade facilitation & supply chain platform “Calista™”
16:47 Safety and innovation on the agenda for Danish Maritime Days
16:26 Fincantieri delivers FREMM “Federico Martinengo” to the Italian Navy
16:04 British Ports Association calls for funding commitments to deliver on welcome first steps on port connectivity
15:35 NIBULON transports Ukrainian metal by water
15:04 STASCo signs contract with BMT for navigation simulator REMBRANDT
14:37 ESPO applauds EU role in achieving the IMO agreement on CO2 reduction target for shipping
14:28 Tallink Group’s consolidated revenue in 2017 amounted to EUR 967.0 million
14:04 Seafarer issues to be highlighted during 105th session of IMO's Legal Committee
13:32 HHLA to strengthen and expand its intermodal activities through its rail subsidiary Metrans
12:56 Bunker prices are going down at the Far East ports of Russia (graph)
12:33 Aleksey Kadilov elected as Director General of Baltiysky Zavod (photo)
12:09 US Federal Maritime Commission to examine trucking & delivery arrangements
11:45 Russia’s General Board of State Expert Review approves yet another phase of project on construction of Zvezda shipyard (photo)
11:09 CMA CGM announces GRR from Asia to East Africa
10:45 Foreship takes world’s leading CFD simulation software, StarCCM+ into use
10:30 ABP shortlisted for two Humber Renewables Awards
10:22 Brent Crude futures price down 0.04% to $74.03, Light Sweet Crude – down 0.13% to $68.31
10:08 Nakilat is the first company in Qatar certified for ISO45001
09:39 Freeport of Riga Authority along with several port companies visited TransRussia 2018
09:17 Baltic Dry Index up to 1,306 points
09:08 Compensation regime for Hazardous and Noxious Cargoes a step closer - IMO
08:48 City of Antwerp and Antwerp Port Authority start urban mission to Moscow and St. Petersburg

2018 April 23

18:06 World’s largest short sea Ro-Ro vessel MV Celine christened at Dublin Port
17:52 Digital Ship’s Maritime Big Data Forum will be held on 29 May 2018 in Oslo
17:36 Ocean Rig announces agreement to postpone delivery of newbuilding drillship Ocean Rig Santorini
17:20 Construction of Bagayevsky hydrosystem begins in Rostov Region (photo)
17:05 ITF urges Hutchison Ports to improve global health and safety operations
16:35 Polskie LNG conduct a technical dialogue on extension of LNG Terminal in Świnoujście
16:29 Rosmorport’s icebreakers assisted over 5,700 vessels in freezing seaports of Russia this winter navigation season
16:05 Hapag-Lloyd plans 20 percent reduction in CO2 emissions by 2020
15:55 Azerbaijan Caspian Shipping Company to provide additional scholarships for students
15:33 TransContainer’s net profit in QI’2018 increased by 19.5% Y-o-Y to RUB 1.479 million
15:04 M.v. Tucana delivers fibre optic cable baskets from Drammen (Norway)
14:47 Port of Gdansk (Poland) throughput up 44% to 12.7 million tonnes in January-March 2018
14:31 Average wholesale prices for М-100 HFO in RF spot market up to RUB 13,542 per tonne
14:10 ICTSI PNG units ink union agreements
13:59 MOL сrude oil tanker rescues a castaway in the South China Sea
13:39 Container barge transport to become more efficient in the port of Antwerp