• 2018 April 19 14:11

    Global bunker market: the state of volatility remains, expert says

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have been rather volatile during the week. First, the possible trade war posed a threat to demand. However, in the beginning of the week geopolitical concerns over a military strike in Syria and possible fallout across the Middle East compensated concerns over surging U.S. shale production and over a potential downside to global oil demand. At the moment, there appears to be no escalation of the conflict with Russian and Iranian forces, after the U.S. and allies the UK and France launched attacks against Syria.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated slight upward trend in the period of Apr.12 – Apr.19:
        
    380 HSFO - up from 381.57 to 387,29 USD/MT (+5.72)
    180 HSFO - up from 422,71 to 427,36 USD/MT (+4.65)
    MGO        - up from 654.36 to 660,93 USD/MT (+6.57)

    There was a number of forecasts have been published by leading international organisations during the week.

    The International Energy Agency (IEA) reported that OPEC and its allies appeared to have accomplished their mission of bringing global oil stocks to desired levels. As per IEA, OECD commercial stocks dropped by 26 million barrels in February and were just 30 million barrels above the five-year average at end-February. The average could be reached by May, on the assumption of tight balances in 2Q18. The IEA report followed up OPEC's monthly release on April, 12 that said the global oil inventory surplus is close to evaporating. The IEA report also confirms the monthly data from OPEC earlier last week, which showed the group's output declined by 201,000 in March – the factor supporting global fuel indexes.

    The IEA also said that the U.S.-China trade war could result in lower oil demand. The agency kept its forecast of oil demand growth at 1.5 million barrels per day (bpd) but noted that the trade war represented a serious downward risk to that projection. As per the IEA, a 1 per-cent decline in global GDP growth would translate into lower oil demand growth by 690,000 bpd.

    Barclays in turn significantly tightened its forecast for Venezuelan production, lowering it to 1.1-1.2 million barrels per day (bpd), down sharply from its previous forecast of 1.4 million bpd. That helped guide the bank’s upward revision for its price forecast for both WTI and Brent in 2018 and 2019, a boost of $3 per barrel. Bank also said that the explosive growth of U.S. shale keeps the market well supplied, and ultimately forces a downward price correction in the second half of the year. Meantime, one of the supply risks is the potential confrontation between the U.S. and Iran. The re-implementation of sanctions threatens to cut off some 400,000 to 500,000 bpd of Iranian supply.

    Goldman Sachs noted that the sudden spike in geopolitical tension only reinforces its prediction of a 10 percent increase in commodity prices over the next 12 months. Talking about the risk of a disruption of Iranian supply, Bank considers that U.S. sanctions could force European refiners to reduce their purchases of Iranian oil, but the real question is if Iranian oil is simply rerouted to Asia or if Iran is forced to incur cutbacks. The effectiveness of U.S. sanctions on shipping insurance might be the key to answering this question.

    U.S. President Donald Trump has threatened to pull out of a nuclear deal be-tween Iran and six major powers by May 12 unless Congress and European al-lies help fix it with a follow-up agreement. If Iranian production does decline following the reintroduction of sanctions, this could push fuel prices up.

    Geopolitical tensions have returned after the United States, France and Britain launched 105 missiles on Apr.14, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7. Meantime, as far as developments in Syria are concerned, the market has had a sigh of relief in the sense that there is no escalation, either diplomatically, or on the ground. Although Syria itself is not a significant oil producer, the Middle East is the world’s most important crude exporter and tension in the region tends to put oil/fuel markets on edge.

    For fuel prices, much also depends on what OPEC decides at its June meeting. All recent signs point to an extension of the supply curbs through the end of this year, and perhaps through the first half of 2019 as well. OPEC countries appear more determined than ever to erase the supply surplus. Much of the motivation comes from Saudi Arabia, OPEC’s most influential member, who reportedly wants $80 per barrel to increase the valuation of Saudi Aramco.

    Venezuela’s production fell by 55,000 barrels per day in March, to 1.488 million bpd. Analyst consensus is that Venezuela is unlikely to pull out of this tailspin. In fact, Venezuela’s position is likely to worsen, with Venezuelan refineries expected to close due to crude shortages and underinvestment. This drop in production is bound to support higher fuel prices.

    U.S. drillers added seven oil rigs in the week to April 13, bringing the total count to 815, the highest number since March 2015. The data underscored worries that rising U.S. output could potentially derail OPEC's effort to end a supply. Domestic oil production - driven by shale extraction - rose to an all-time high of 10.54 million bpd last week, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.

    The White House is reportedly preparing new tariffs on China as it tries to step up the pressure on Beijing. The U.S. will also draw up prohibitions on Chinese investment in advanced U.S. technology, whether by acquisition, joint ventures, licensing or any other arrangement.

    Even as OPEC has apparently achieved its goal of draining surplus stocks, the group seems set on keeping the cuts in place through the rest of this year. Meanwhile, fuel prices may face a correction as U.S. production continues to surge and the market has already priced in the potential of renewed sanctions on Iran as well as a further Venezuela production drop. We suppose bunker prices may continue the phase of irregular changes next week.



     

     

     

     

     

     

    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 August 16

18:45 Kalashnikov Concern’s Vympel Shipyard lays freezer trawler of Project T30
18:06 Port of Dover awarded contract to Solent Marine Ltd to design and fit-out Dover's new marina
17:32 Maersk Line announces rates from Far East Asia to West Africa
17:06 Hapag-Lloyd increases reefer fleet by 11,100 containers
16:56 DFDS orders additional freight ferry (ro-ro) newbuilding from the Chinese Jinling Shipyard
16:52 Sovcomflot’s shuttle tanker Governor Farkhutdinov ships 600th crude oil cargo for Sakhalin-2
16:03 CMA CGM announces GRR from Asia to Mozambique
15:47 Taganrog Sea Commercial Port's H1 2018 employee benefits and rewards programme totals RUB 2.2 million
15:31 Melbourne port operator ICTSI may be investigated by State and Federal authorities
15:09 Bunker prices at Far Eastern ports remain flat
14:33 CMA CGM announces GRR from Asia to Indian Ocean
14:27 MABUX: Bunker prices may change irregular next week
14:13 Maersk Line announces rates from Far East to North Europe
13:42 First ever S-T-S loading of 70000dwt Panamax coal carrier performed at Shakhtersk harbour transshipment location in Sakhalin
13:32 More investment contracts at the Port of Gdansk
13:02 Wärtsilä equipped Canadian ferry will have minimal environmental impact
12:16 Damen Shipyards Galati celebrates 125 years
12:09 Okskaya Sudoverf Shipyard launches 6th serial barge of Project ROB20
12:03 Boskalis presents half-year results and terminates loss-making low-end transport activities
11:59 Port of Oakland container volume up 3.6 percent in July 2018
11:45 Rolls-Royce launches new battery system for ships
10:58 DP World revenue up 14.4% in H1 2018
10:57 VARD secures contract for one autonomous and electric-driven container vessel for YARA
09:39 EU NAVFOR mission operation commander visits Spanish MPRA in Djibouti
09:21 Baltic Dry Index gains to 1725 points

2018 August 15

18:33 Equinor extends partnership with The Arctic Race of Norway
17:56 Port Kavkaz seven-month volumes soar 30% Y/Y to 25.21 million tonnes
17:36 Russian Gov't to allocate RUB 500 million in subsidies to support small-tonnage fishing ships construction, Rosrybolovstvo says
17:34 Maersk Line to rise rates from Far East to East Coast South America
17:30 Yang Ming orders ten 2,800 TEU containerships
17:19 Nor-Shipping 2019 takes place in Oslo and Lillestrøm, Norway, from 04 to 07 June 2019
16:05 New Times Shipbuilding announces delivery of oil tanker
15:04 Rosrybolovstvo looks into building a series of three RVs as from 2020
15:04 Concordia Maritime AB announces interim report for H1 2018
14:12 Multipurpose Reloading Complex spends over RUB 600,000 on employee benefits and rewards programme
13:20 Konecranes to deliver more electric RTGs to Luka Koper in Slovenia
13:02 Join Marinet Conference at SMM 2018, Hamburg
12:32 Prime Minister Dmitry Medvedev gives green light to NLR construction project
12:01 WW Ocean presents new-look trade maps resembling public transit maps
11:15 Port of Vancouver posts H1 2018 results
10:41 Aker Solutions wins orders for Liuhua power umbilical systems in China
10:21 Nor-Shipping 2019 devotes entire hall to new focus on Blue Economy
10:05 Crude oil futures drop 0.22% to $72.3 in London and 0.48% to $66.72 in New York
09:29 Bunker prices at Port of St. Petersburg show mixed movements

2018 August 14

18:30 Hapag-Lloyd annonces General Rate Increase from East Asia to USA and Canada
18:12 FE Railways' loaded freight in Jan-Jul up 2% to 28.2 million tonnes
18:07 Hapag-Lloyd changes terminals at Genoa on its MPS service
17:47 British Ports Association launch Sustainable Development Resolution
17:45 Euro Tank Terminal extends jetty at the port of Rotterdam
17:31 MEYER WERFT holds float out procedure for cruise ship for AIDA Cruises
17:29 APM Terminals launches online customer platform in Bahrain
17:27 MED MARINE delivers a 24m ASD Tug from Turkey to Estonia
16:24 Offshore installation vessel starts work on Belgium’s largest offshore wind farm
15:44 Logistec Corporation declares quarterly drvidends on shares
15:21 Vessel Performance Optimisation Forum Singapore initial speakers announced
15:02 Danaos Corporation announces closing of comprehensive debt refinancing
14:16 Sea Port St. Petersburg earmarked over $337,000 for bonus and social responsibility programmes
14:13 TTS Group ASA secures new contracts for access equipment and cranes for two reefer vessels
14:06 Ports of Primorsk and Ust-Luga support green shipping, to implement incentives for LNG-powered ships as from August 15, 2018
13:39 Bunker prices in Far East seaports edge down