• 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)




2019 March 26

18:06 Georgia Ports Authority marks decade of partnership with Kia
17:50 Nuclear-powered container carrier Sevmorput delivered first batch of cargo for Arctic LNG 2
17:36 ABB wins contract to power the first Chinese-built cruise vessel
17:04 Austal awarded A$369 million U.S. Navy contract
16:34 Nexans to supply turbine cables & accessories for the world’s first floating offshore wind farm operating at 66 kV
16:27 First LNG bunkering operations performed at Polish ports
16:04 CNOOC orders MacGregor on-vessel mooring systems for their new deepwater floating production unit
15:45 Bunker prices are slightly up at the Far East ports of Russia (graph)
15:34 Wärtsilä propulsion solutions producing superior power for two new tug boats
15:04 European Parliament adopts final agreement on the Connection Europe Facility for 2021-2027
14:51 LNG Terminal in Świnoujście accepts fourth LNG spot cargo delivery this year
14:39 NORDEN sells 4 dry cargo vessels
14:27 LOTOS and PGNiG: first commercial bunkerings of ships with LNG in Polish seaports
13:54 Orekhovo-Zuyevo, missile ship of RF Navy’s Black Sea Fleet, headed for Mediterranean under combat training plan
13:29 Phase 2 of Krievu Island project receives GRAND PRIX at Latvian Builders Association’s 2018 Annual Awards
13:02 Van Oord posts results for 2018
12:46 Sergey Karataev appointed General Director of Freight One JSC
12:20 Damen Verolme Rotterdam completes refit of drilling rig Stena Don
11:35 Rosmorport to hold an auction to sell its МСП-90 boom-laying boat
11:11 16 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on March 25-26
10:49 Rosmorport to hold an auction to sell its Leader pilot boat
10:13 Brent Crude futures price is up 0.13% to $66.9, Light Sweet Crude – up 0.65% to $59.20
09:44 MABUX: Bunker Market this morning, March 26
09:22 Baltic Dry Index is down to 689 points
09:07 TenneT awarded a framework agreement to Jan De Nul Group for repairs of TenneT’s offshore high-voltage cables
08:07 Berths for inland shipping now operational in Afrikahaven at the port of Amsterdam
07:41 GTT grants certification to SVEZA Group for production of plywood for Mark III containment system

2019 March 25

18:00 Navis N4 TOS selected to enhance terminal operations at North Carolina Ports
17:50 Increased safety for pilots boarding in Solent with new weather station
17:45 EMAR Offshore Services welcomes Damen ASD Tug 2811
17:25 Three basins of Russia’s IWW prepared for navigation season of 2019
16:48 Krasnoye Sormovo shipyard signs contract on construction of 11 dry cargo carriers for STLC
15:52 Kenia host 6th Annual East Africa Transport and Infrastructure conference on 13-14 May 2019
15:26 UK Hydrographic Office works with Seychelles government to help tackle piracy in the Indian Ocean
15:04 Yang Ming reports financial results for 2018
14:03 Closing of MacGregor's TTS acquisition postponed to Q2 2019
13:10 ArcelorMittal and Dow start trials for a new CO2 project in North Sea Port
12:39 Average wholesale prices for М-100 HFO up to RUB 19,562 in RF spot market
12:05 Port of Antwerp updates figures for 2018
11:47 The Maritime Standard swings into 2019
11:30 Damen Shipyards Den Helder signs order with Netherlands’ Defense Material Organization for Expeditionary Survey Boat
11:21 Working group on construction of Nizhegorodsky hydrosystem established under auspices of RF Transport Ministry
11:12 MABUX: Bunker Market this morning, March 25
11:04 IMO-executed GloFouling project kicks off to protect marine biodiversity
10:36 Windpark Fryslân awards contract to Van Oord and Siemens Gamesa to build wind farm
10:30 Polarcus announces redelivery of Vyacheslav Tikhonov
10:00 Keppel finalizes the rig construction contract with Awilco Drilling for the construction of semisubmersible drilling rig
09:56 Throughput of Chinese sea and river ports grew by 3.2% to 2.03 billion tonnes in 2M’2019
09:34 Brent Crude futures price is down 0.64% to $66.32, Light Sweet Crude – down 0.76% to $58.59
09:15 Baltic Dry Index is down to 690 points

2019 March 24

16:29 VARO and GoodFuels extend partnership to scale Bio Fuel Oil availability to deep sea segment in ARA Region
15:13 New Kongsberg Maritime application enables Bureau Veritas to successfully complete the first ‘DP Digital Survey’
14:27 ESVAGT increases presence in dynamic offshore wind market
13:03 Semco secures EPCI contract with Total as part of the Tyra Redevelopment Project
12:01 Safe Scandinavia option restructure and extension

2019 March 23

16:03 NCL announces plans for new staff training facility
15:54 ABP Humber provides land to support KIA expansion
14:22 SeaPlanner to support marine coordination for Taiwan's Formosa I offshore wind farm
13:31 Høglund awarded fuel-gas supply systems contract for six Hurtigruten passenger ships retrofits
12:25 McDermott secures substantial offshore EPCI contract in the Middle East