• 2018 April 5 22:48

    MABUX: The state of uncertainty could keep bunker prices in the phase of irregular changes

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have bounced back at the end of the quarter as geopolitical risk and OPEC's determination to further extend its production cut deal put a floor under prices. Mean-time, ongoing declines in Venezuela and concerns about heightened tension between the U.S. and Iran have significantly raised the risk premium for oil, even as some short-term factors recently pushed down prices.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) changed insignificant and irregular in the period of Mar.29 – Apr.05:
        
    380 HSFO - down from 367.50 to 366,14 USD/MT (-1.36)
    180 HSFO - down from 408,50 to 406,21 USD/MT (-2.29)
    MGO        - up from 631.14 to 633,79 USD/MT     (+2.65)

    Barclays forecasts a $51-per-barrel price on WTI by the third and fourth quarters of this year, and expects Brent to fall to $57 by the end of the year. As per Bank, recently, the oil market has been supported by supply disruption concerns due to geopolitical situation in the Middle East. However, while demand is being pushed up supported by global economic growth and geopolitical risk that threatens to remove more supply from the market, that short-term deficit will head into surplus again by the second half of the year, according to Barclays.

    As per some information circulating on the market, OPEC and Russia are looking at ways of institutionalizing their cooperation beyond the current production cut agreement, which may (or may not) expire at the end of this year. It was reported last week that both par-ties are working on solidifying their cooperation for the long-term. Besides, OPEC and its non-OPEC partners are reportedly considering an extension of the current production cut agree-ment for six months, through mid-2019.

    After three months of steady output, Russia’s crude oil production increased in March to 10.97 million bpd, the highest level since April 2017. The March production level showed the first increase since December 2017 and is slightly above Russia’s quota in the production cut deal. Russia’s pledge in the OPEC+ deal is to take away 300,000 bpd from its October 2016 level, which was the country’s highest monthly production in almost 30 years—11.247 million bpd. The Russian compliance with the OPEC/non-OPEC deal last month was at 93.4 percent. It was also noted, that Russia would continue to comply with the OPEC/non-OPEC deal until the end of this year and even into 2019 if need be.

    Iraq in turn has approved an increase in country’s crude oil production capacity to as much as 6.5 million bpd by 2022. This compares to a current production capacity of below 5 million barrels and production rates of around 4.4 million bpd as per its OPEC quota. This huge dependence on crude revenues has made Iraq the focus of doubts around compliance with the 2016 OPEC+ production cut deal, with many expecting that the cartel’s number-two producer will be the first to start cheating.

    One of the Saudi oil tankers was attacked on Apr.03 west of Hodeidah by the Iran-aligned Houthi movement. The attack was thwarted after one of the Arab coalition’s ships intercepted the attempt. Sustaining minor damage, the oil tanker completed its course. The Houthi Shiite rebel group has been fighting a Saudi-led coalition in Yemen since 2015. At the end of last year, they threatened that they would start attacking oil tankers and warships sailing under enemy flag if the Gulf coalition fighting it in the country does not reopen its ports. The geopolitical tension in the region has formed momentum support to the fuel prices.

    U.S. crude oil production hit a record, at 10.27 million barrels per day (bpd) last week. That puts the United States ahead of top exporter Saudi Arabia. Only Russia pumps out more, at 11 million bpd. The number of oil rigs in the United States decreased by 7 last week, for a total of 797 active oil wells in the US - a figure that is still 135 more rigs than this time last year.

     Three companies that purchased oil from the U.S. strategic petroleum reserve (SPR) have apparently complained that the oil contains dangerous levels of hydrogen sulfide (H2S). A concentration of H2S that is too high can corrode pipes and refineries. If there are broader problems with the quality of the remaining 665 million barrels placing in storage, it would make the U.S. strategic reserve much less effective as an energy security tool.

    China is imposing tariffs by up to 25 percent on 128 U.S. products, including steel and al-loy pipe for oil and gas, effective on Apr.02. The Chinese tariffs are seen as retaliation to last month’s U.S. tariffs on imported steel and aluminium—a 25-percent tariff on steel imports and a 10-percent tariff on aluminium imports—which U.S. President Donald Trump said he was imposing to address unfair global practices and to protect America’s steel and aluminium indus-tries. While U.S. manufacturers could see a limited impact on steel pipe in this round of Chinese tariffs on U.S. goods, the oil and gas industry is more vulnerable, because oil and gas pipelines import about three-quarters of the steel used to build projects in the United States.

    After Yuan-denominated crude oil futures were launched in China last week, another major step was taken to paying for crude oil imports in its own currency instead of U.S. Dollars. According to the proposed plan, Beijing would start with purchases from Russia and Angola, two nations which, like China, are keen to break the dollar’s global dominance. They are also two of the top suppliers of crude oil to China, along with Saudi Arabia. A pilot program for yuan payment could be launched as soon as the second half of the year. If China's plan to push the Petroyuan's acceptance proves successful, it will give China more power over global oil and fuel prices and will help the Chinese government in its efforts to internationalize yuan.

     HSBC reported that strong demand from Asia has meant that the LNG market has avoided the glut that many forecasts had predicted up until recently. In fact, the LNG market may face the opposite problem: by 2022-2023, there could be a shortage of supply, the result of a slowdown in spending on new projects. The HSBC’s conclusion closely echoes a recent report from Royal Dutch Shell, which warned of a brewing supply crunch in the 2020s due to a shortfall in project development.

    Still, there are a number of uncertainties that make rather difficult to forecast any further fuel trend. On the one part, if OPEC somehow abandons its cuts or begins a phase out sooner than expected, then fuel prices could slide significantly. But there are a number of upside risks as well. The most dangerous is the likely return of sanctions on Iran from the U.S. which, in worst case, may transform into military conflict. Another upside driver is a fall of Venezuela’s oil production. We suppose bunker prices may continue the phase of irregular changes next week while the market is looking for more considerable drivers.

     

     

     

     

     

     

     

     

    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 January 19

16:19 Ocean Yield acquires Suezmax tanker Milos for $56.0 million
15:16 Evac expansion continues with acquisition of UK service company Transvac Systems
14:02 Deltamarin contracted to continue with Titanic II project
12:51 SGRE launches 10 MW offshore wind turbine
11:44 Algoma increases its interest in the ocean self-unloader Pool

2019 January 18

18:06 North Carolina Ports sets new record in 2018
17:47 Freight turnover of Neva-Metal (Saint-Petersburg) in 2018 climbed by 3% Y-o-Y to about 3.2 million tonnes
17:25 Okskaya Sudoverf obtains patent for state-of-the-art pontoons
17:06 Hamburg prepares for ‘Hard Brexit’
16:44 Throughput of port Primorsk in 2018 fell by 7% Y-o-Y to 53.48 million tonnes
16:23 GTT receives a new order from SHI to design the tanks of two LNG carriers on behalf of Gaslog
16:20 NOVATEK elects new Board of Directors
15:56 Throughput of port Vyborg in 2018 grew by 25% Y-o-Y to 1.93 million tonnes
15:33 Stena Line’s first new generation ferry ‘floats’ in China
15:21 Bunker sales at the port of Singapore in 2018 fell by 1.7% Y-o-Y to 49.8 million tonnes
15:03 Panama Direct service CMA CGM to resume weekly rotations
14:47 Throughput of port Vysotsk in 2018 climbed by 7% Y-o-Y to 18.79 million tonnes
14:33 GranIHC appointed contractor for Equinor’s Peregrino Phase II Project
14:19 Port of Ust-Luga handled 98.72 million tonnes in 2018, down 4% Y-o-Y
14:03 Algoma Central Corporation increases its interest in ocean self-unloader Pool
13:50 18 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 17-18
13:35 Throughput of the Port of St. Petersburg in 2018 up 11% Y-o-Y to 59.32 million tonnes
13:18 CMA CGM unites its Containerships and MacAndrews brands
13:11 Vladimir Putin supports Government’s proposal on expanding Far East Ministry’s functions with Arctic issues
12:49 Throughput of port Kavkaz in 2018 grew by 11% Y-o-Y to 49.276 million tonnes
12:26 MV Werften purchases Neptun Ship Design
12:08 Sakaide shipyard holds naming ceremony for new LNG carrier jointly owned by NYK and JERA
11:38 PGNiG SA signs agreement for oil and gas exploration and production in UAE
11:14 Remote pilotage to be allowed in Finland
10:47 Free zone status is a crucial advantage for the future development of the Freeport of Riga
10:06 Ice restrictions at the port of Ust-Luga come into effect on January 31
09:42 Brent Crude futures price up 0.9% to $61.73, Light Sweet Crude – up 1.09% to $52.64
09:20 Baltic Dry Index is up to 1,077 points

2019 January 17

18:13 PORT OF KIEL presents annual results 2018
17:51 Ice restrictions at the port of Primorsk come into effect on January 25
17:28 Global Ports sets up a common service call centre
17:09 EFIP welcomes and supports the European Parliament position on the Connecting Europe Facility for 2021-2027
17:05 North Sea Port monitoring the Brexit closely
16:44 ABP invests £700K to boost storage at Port of Ipswich
16:27 Global fuel market: still many uncertainties in both demand and supply
16:22 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
16:05 OCEAN Alliance extends duration of OCEAN Alliance to ten years
15:42 COSCO SHIPPING Ports signs agreement with PSA to add two new berths at the terminal in Boao, Hainan
15:31 Liebherr supports the 6th International Forum of Dredging Companies as its Sponsor
15:02 Ocean Yield ASA agrees to acquire a modern Suezmax tanker for a consideration of USD 56.0 mln
14:02 SEACOR Marine enters agreement to acquire three additional platform supply vessels from affiliates of COSCO Shipping Group
13:49 Throughput of Chinese ports grew by 4.2% to 9.22 billion tonnes in 2018
13:32 Jensen Maritime provides design for Shaver Transportation’s new tugboat
13:14 OOCL rolls out third phase of Ocean Alliance product refinements
12:50 Baltic Ports Organization’s schedule for 2019 is set
12:38 Port of Los Angeles breaks all-time cargo record in 2018
12:26 Qatar accedes to load lines convention
12:01 Sunseeker International and Rolls-Royce to present first production yacht with MTU hybrid power in 2020
11:51 Bunker prices continue going down at the Far East ports of Russia (graph)
11:38 Port of Zeebrugge handled 40.1 million tonnes in 2018
11:25 Nor-Shipping reveals stellar line-up for Ocean Leadership Conference
10:52 10 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 16-17
10:28 NOVATEK’s hydrocarbon production totaled 548.4 million boe in 2018, up 6.9% Y-o-Y
10:03 Brent Crude futures price down 0.34% to $61.11, Light Sweet Crude – down 0.54% to $52.03
09:39 Tallink and Taltech to collaborate on developing smart ship solutions