• 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 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