• 2019 January 10 15:26

    Expert says bunker prices may continue upward evolution in a near-term outlook

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have turned into upward evolution during the week. The latest optimism centers on the ratcheting down of tensions between the U.S. and China, as well as a softer tone from the U.S. Federal Reserve. The threat of sanctions on Iran, global demand that continues to rise (despite increasing predictions of the demise of demand growth), and the deteriorating situation in Venezuela have also supported indexes.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), has demonstrated firm upward trend in the period of Jan.03 – Jan.10:
        
    380 HSFO - up from 333.79 to 373.71 USD/MT (+39.92)
    180 HSFO - up from 377.79 to 418.07 USD/MT (+40.28)
    MGO         - up from 556.93 to 592.79 USD/MT  (+35.86)


    Most major investment banks are forecasting a rebound in oil prices in 2019. Price forecasts vary widely, but most have both WTI and Brent above current spot prices. Bank of America Merrill Lync, for instance, sees WTI averaging $59 per barrel in 2019. Citi is at the bearish end with a $49 price target. For Brent, Barclays says the benchmark will average $72, and a half dozen other investment banks have price estimates within a few dollars of that price.

    At the moment there is a number of factors that may have impact on oil and fuel in 2019, on both the supply side and the demand side.

    The largest risk to supply comes from Iran. The U.S. waivers to eight countries buying Iranian oil will expire in May. Iran’s production fell by 380,000 bpd in November from a month earlier, dipping below the 3 million-barrel-per-day mark. There is still a lot of supply that could be disrupted, and if the U.S. succeeds, OPEC+ may find that it accomplished much of what it set out to do in Vienna by mid-year.

    In Libya the Sharara field, which has typically produced in excess of 300,000 bpd, was temporarily shut down last month. An inspection team reported the theft of key operational equipment, including transformers and cables from several wells. It is expected that the incident will reduce Sharara's output by approximately 8,500 barrels per day even after the main system restarts operations.

    Venezuela closed out the year near 1 million bpd of output, down more than 600,000 bpd since January 2018. The losses could slow at this point. Yet, it is hard to expect that production to rebound in the near- or even the medium-term. China and Russia are Venezuela’s biggest creditors, with China having provided US$50 billion in loans already. Venezuela has undertaken to repay these with crude oil supplies but has struggled to fulfill its commitments because of falling production and lack of financial means to reverse the fall. Crude oil deliveries under oil-for-money deals with Russia’s Rosneft have also been delayed.

    U.S. shale is expected to continue its growth. Shale producers have vastly exceeded 2018 forecasts, surpassing some initial estimates by around 1 million bpd. Nevertheless, the collapse of oil prices in the fourth quarter of 2018 led to a slowdown in the shale patch. The business activity index published by the Federal Reserve Bank of Dallas show that activity decelerated and production growth slowed. The data suggests that the U.S. shale industry was very responsive and sensitive to lower oil prices.

    OPEC+ cuts. The 1.2 million bpd cut should help eliminate much of the surplus, although perhaps not by the mid-year meeting in Vienna. OPEC+ might be forced into extending its production cuts. Besides, after suggesting multiple times earlier last year that OPEC and its non-OPEC partners – led by Russia – would formalize a permanent governance architecture to coordinate their efforts, the group is now downplaying such a development. Russia said that antitrust risks from the U.S. government make the idea too risky. There is still uncertainty on whether or not OPEC+ can complete the job of balancing the market.

    Despite of that, OPEC’s oil production fell in December to 32.68 million bpd, down about 460,000 bpd from a month earlier. It was the largest monthly decline in two years. The reductions came ahead of the OPEC+ deal, which begins this month, and suggests that Saudi Arabia wanted to unilaterally tighten up the market. Saudi Arabia alone decreased output by 400,000 bpd, and Saudi officials said they would cut deeper in January.

    One of the largest pricing risks is the possibility of an economic downturn. There are some critical markers already: slowing growth in China, contracting GDP in parts of Europe, currency crises in emerging markets and financial volatility around the world. WoodMac forecasts demand growth at 1.1 million bpd in 2019, but the trend is at risk. The U.S.-China trade war could still drag down the global economy, but financial indicators are in a warning zone.

    U.S. and Chinese officials resumed trade talks, and news of the meeting bolstered sentiment in financial markets. Anyway, China is still holding off on buying much American oil, despite the three-month trade truce between the two countries and due to the wide availability of crude supplies from Iran and Russia. Besides, the executives from the national oil companies hesitate to procure U.S. crude unless they are told to do so.

    The IEA expected the U.S. would add 1.3 million bpd in 2018, while the U.S. EIA predicted growth of 1 million bpd. In reality, the U.S. added about 1.5 million bpd in 2018, and preliminary data suggests U.S. production in December 2018 will be 1.6-1.7 million bpd higher than the same month a year earlier.

    Companies around the world have scrapped a record number of large crude tankers in 2018. About 100 vessels of the industry’s main crude carriers have been sent to India and Bangladesh for demolition. This is no surprise, as of September last year the vessels, which transport 40 percent of the world's crude, were on course for the worst charter rates in three decades. Morgan Stanley estimates the global fleet of large crude carriers could lack 100 million barrels of transportation capacity in the first half of 2020. Average earnings for 2 million barrel-hauling VLCCs crashed by 65 percent to $6,159 a day in 2018. They were $17,794 for all of 2017, $41,488 for 2016 and $64,846 in 2015.

    Outlook for the coming week
    The key factors in the next few months will be how much OPEC+ cuts will help clear the oversupply, how much U.S. oil production growth could slow down, and how the global economic growth will hold. In a near-term outlook, we expect bunker prices may continue upward evolution.

     

     

     

     

     

     

     

    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 July 15

17:58 IAPH welcomes new Associate Member from Switzerland
17:33 NIBULON transported 3.5 million tonnes of cargoes by water transport
17:06 Hapag-Lloyd to introduce new Middle East-India-Africa Express Service
16:07 Desktop Just-In-Time trial yields positive results in cutting emissions
15:44 Prevention of marine pollution in South Asia discussed at regional workshop
15:15 Cargotec’s MacGregor receives clearance from the Chinese competition regulator for the acquisition of the marine and offshore businesses of TTS Group
14:56 Murmansk Sea Fishing Port handled 116,000 tonnes of cargo in 6M’2019, down 35.5% Y-o-Y
14:39 RS issues revised Rules for Classification and Construction of ships carrying liquefied gas
14:15 SEACOR Marine announces departure of Chief Operating Officer
13:53 Sever Bay Port terminal on Taimyr included into RF area planning scheme
13:32 MAN Energy Solutions, DSME and HSD Engine sign strategic agreement on engine digitization
13:01 CargoSmart announces GSBN Service Agreements with CMA CGM, COSCO SHIPPING LINES, COSCO SHIPPING Ports, Hapag-Lloyd, Hutchison Ports, OOCL, Port of Qingdao, PSA International and Shanghai International Port Group
12:48 Average wholesale prices for М-100 HFO up to RUB 16,149 in RF spot market
12:30 ABS and MOL sign MOU to build up to 14 next generation gas carriers
12:14 DSME Smart Ship Solution approved by LR
11:52 Atomenergomash JSC and Aker Arctic Technology Inc sign memorandum of understanding
11:43 MEYER intensifies partnership with Stengel
11:27 SailGP partners with Port of Southampton to deliver Cowes SailGP Tech Area
11:01 Rashid Sharipov elected as Chairman of NCSP BoD
10:25 MABUX: Bunker market this morning, July 15
10:18 Brent Crude futures price is up 0.01% to $66.73, Light Sweet Crude – down 0.15% to $60.12
09:54 KN enhances portfolio of loaded oil products and rendered services
09:30 Throughput of port Shanghai (China) in Jan-June’19 declined by 2.1% to 272.29 million tonnes
09:13 Baltic Dry Index is up to 1,865 points

2019 July 14

16:09 USCG coordinates rescue of fishermen 1300 miles southwest of San Diego
15:22 Sanmar Shipyards strengthens its executive team
13:21 MOL sets conditions for issue of 'sustainability' bonds
12:11 SCHOTTEL and ULSTEIN with new cooperation to optimise ship operations with digital services
11:56 Navios Containers promotes Erifili Tsironi as CFO
10:55 2020 Bulkers Ltd. inks chartering agreements with Koch for three Newcastlemax dry bulk carriers

2019 July 13

15:19 Japanese fishing company convicted of obstruction of justice and falsifying records to cover up illegal oil and garbage pollution
13:52 HII completes flight deck on aircraft carrier John F. Kennedy
12:28 SHI wins orders for eco-friendly and highly efficient S-Max tankers
11:23 VT Halter Marine bags $2.9 million contract for U.S. Navy CMAMP program study

2019 July 12

18:19 Shantou China Merchants Port Group takes delivery of eight Kalmar empty container handlers
18:01 Safety of ships and fishing gets a boost in Ghana
17:44 IMO and FAO join efforts to reduce marine plastic litter from fishing vessels
17:26 Throughput of Russian seaports in 6M'2019 grew by 2.8% to 409.0 million tonnes of cargo (detalization)
17:03 SEA\LNG releases study showing benefits of LNG
16:42 North-Western Shipping Company carried 2.3 million tonnes of cargo in H1’19
16:25 Throughput of port Kaliningrad in Jan-June’2019 fell by 19% Y-o-Y to 5.82 million tonnes
16:03 Diana Shipping announces increase of purchase price and extension of tender offer for shares of common stock
15:24 Throughput of port Vysotsk in Jan-June'2019 climbed by 5% Y-o-Y to 9.44 million tonnes
15:03 Port of Long Beach cargo volume tops 677,000 TEUs in June 2019
14:31 Sredne-Nevsky Shipyard lays down yet another minesweeper of Project 12700
14:03 MOL schedules a major renovation of its operated cruise ship, the Nippon Maru
13:02 Höegh LNG executes 18 month interim LNGC timecharter with Cheniere for Höegh Galleon
12:52 NOVATEK’s hydrocarbon production totaled 296.1 million boe in H1’2019
12:00 Throughput of port Primorsk in Jan-June’2019 grew by 11% Y-o-Y to 29.83 million tonnes
11:23 Damen signs maintenance contract with Netherlands Ministry of Defence
11:01 Port of Ust-Luga handled 54.334 million tonnes in 6M’19, up 11% Y-o-Y
10:40 Throughput of Port St. Petersburg in 6M'2019 climbed by 1% Y-o-Y to 30.07 million tonnes
10:36 Belships to expand its fleet with 20th Ultramax newbuilding in 2021
09:54 Bunker prices are going up at the port of Saint-Petersburg, Russia (graph)
09:38 MABUX: Bunker market this morning, July 12
09:35 Brent Crude futures price is up 0.59% to $66.91, Light Sweet Crude – up 0.53% to $60.52
09:18 Baltic Dry Index is up to 1,816 points

2019 July 11

18:36 Denmark starts developing the new digital Register of Shipping
18:13 Naval Energies and Hitachi Zosen Corporation in floating wind energy agreement
18:06 Northwest Seaport Alliance breaks ground on $500M Terminal 5 modernization