• 2019 January 17 16:27

    Global fuel market: still many uncertainties in both demand and supply

    The Bunker Review is contributed by Marine Bunker Exchange

    Despite troubling economic data from China which weighed on oil prices in the beginning of the week, improving fundamentals are beginning to push crude prices upward. Strengthening confidence in OPEC and its allies’ ability to do whatever it takes to keep the markets balanced, and in a de-escalation of the trade war between China and the United States, rendered support to fuel indexes as well.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), has demonstrated irregular changes in the period of Jan.10 – Jan.17:
        
    380 HSFO - down from 373.71 to 372.64 USD/MT (-1.07)
    180 HSFO - up from 418.07 to 418.43 USD/MT     (+0.36)
    MGO         - up from 592.79 to 604.50 USD/MT     (+11.71)


    The World Bank expects oil prices to average $67 a barrel this year and next, down $2 com-pared to projections from June last year. This year, oil demand growth is expected to stay robust, but expected slowdown in emerging market and developing economies (EMDEs) could have a greater impact on oil demand than expected. The outlook for the supply-side is also uncertain as it largely hinges on OPEC and allies’ decisions about production levels, especially after the first half of 2019. The other key uncertainties about oil prices will be the impact of the U.S. sanctions on Iran when the waivers end in early May, as well as the production in Venezuela, which has been steadily falling over the past two years.

    U.S. bank Morgan Stanley in turn cut its 2019 oil price forecasts by more than 10 percent, pointing to weakening economic growth expectations and rising oil supply, especially from the United States. The bank now expects Brent to average $61 a barrel this year, down from a previous estimate of $69, and U.S. crude to average $54, against a prior forecast of $60.

    OPEC plans to publish the quotas for individual countries under the new OPEC/non-OPEC production cut deal agreed upon on December 7 and in force since January 1. The publishing of the quotas for each country could help overcome the skepticism in the market regarding the re-solve of OPEC and its allies to implement the decision made in early December. It is expected, that during the current period of the cuts, until June 2019, OPEC and allies will remove a total of 1.195 million bpd off the market and keep production at 43.874 million bpd.

    Despite renewed hopes that a trade deal could be reached between the U.S. and China by the March 2 deadline, it may still not be enough to offset the negative impact on China’s economic growth. China saw its exports fall unexpectedly in December by 4.4 percent, the most in two years, with imports also falling 7.6 percent in their biggest decline since July 2016. The country also said that its trade surplus with the U.S. in 2018 grew by 17 percent to $323.32 billion, a figure likely to put more pressure on Beijing during ongoing trade talks with the U.S.  In a worst-case scenario, where a trade deal can’t be reached, the outcome for global economic growth and oil/fuel demand will be a bearish market.

    British lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin, triggering political upheaval that could lead to a disorderly exit from the European Un-ion or even to a reversal of the 2016 decision to leave. Parliament voted 432-202 against her deal, raising economic uncertainty that weighed on markets.

    Falling oil exports from Iran due to U.S. sanctions that were reimposed in November, have offered some support to fuel prices. At the moment the United States has no intention of granting any further sanction waivers to Iran crude oil buyers. In November, waivers were announced for eight major Iranian oil importers, among them China, India, Japan, South Korea, Turkey, Taiwan, Italy, and Greece. Some of these importers (notably South Korea and Japan) reduced their Iranian oil imports to zero ahead of the sanctions’ entry into effect. Meantime, China and India declared that their preference is to continue buying Iranian crude even after the expiry of the waivers. India, in particular, even announced a payment settlement mechanism for Iranian oil that may allow it to avoid breaching the U.S. sanctions.

    Venezuelan President Nicolas Maduro was inaugurated for a second term on Jan. 10. However, a coalition of 13 countries in the Americas (the Lima Group), announced in early January that they would not recognize Maduro as legitimate. The Lima Group includes Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Guyana, Honduras, Panama, Paraguay, Peru and St. Lucia. The countries issued a statement that said the May 2018 reelection of Maduro lacks legitimacy, and they condemned the breakdown of the constitutional order and the rule of law in Venezuela. The EIA says Venezuela’s production could fall below 1 million bpd in the second half of this year before declining further to 700,000 bpd by 2020.

    Russia’s refiners have started to upgrade oil refineries to produce more higher-value oil products and less high-sulfur fuel oil (HSFO), but there are concerns that the country won’t be ready in time to meet the new IMO regulations on January 1, 2020. Moreover, even if Russian refiners sell their high-sulfur fuel oil to industries other than the shipping sector, they would still be unable to fully offset lost revenues from decreased demand and depressed prices of HSFO. As per some estimations, Russia’s lost revenue from fuel oil sales could reach US$3.5 billion: more than a third of Russia’s US$9 billion export revenues from fuel oil in 2017.

    According to EIA, IMO sulfur regulations could lead to a glut of HSFO of around 1.1 million bpd along with a corresponding deficit in low-sulfur fuel, leading to unfavorable margins for the less complex refineries, especially those constrained in terms of desulphurization capacity. Switching to low-sulfur crudes is one option for refiners globally to meet the new limits, but most Russian refineries are stuck with using Urals and won’t have the option to switch to sweeter crude grades.

    There was no change to the number of active oil and gas in the United States last week. The total number of active oil and gas drilling rigs is holding steady at 1,075, with the number of active oil rigs decreasing by 4 to reach 873 and the number of gas rigs increasing by 4 to reach 202.  The oil and gas rig count is now 136 up from this time last year, 121 of which is in oil rigs. U.S. crude production rose last week to a record 11.9 million barrels per day, as crude exports jumped close to record highs near 3 million bpd.

    Outlook for the coming week
    There are still many uncertainties in both demand and supply while global fuel market is looking for some direction. We expect bunker prices may turn into 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)





2019 February 16

14:42 Höegh’s RoRo solution chosen for 112MT Transformer shipment
13:28 Torqeedo wins Innovation Award at Miami International Boat Show for powerful new inboard electric propulsion system
12:13 Telford Offshore beefs up its fleet
10:26 Chevron inks new LNG agreement with GS Caltex

2019 February 15

18:05 Noble Corporation announces purchase of a second newbuild jackup rig from PaxOcean
16:57 Port of Goole powered by £1 million solar installation
16:26 ABP continues support of Felixstowe Volunteer Coast Patrol Rescue Service
15:30 Sea Cup 2019 preliminaries kick off in Kamchatka
15:04 CNIIMF authorized to confirm conformity of dangerous cargo containers
13:59 Nevsky Shipyard starts cutting metal for cargo-passenger ship of PV22 project
13:32 Murmansk Sea Fishing Port handled 5,500 tonnes fish in Jan’2019, down 48% Y-o-Y
13:08 Fincantieri and Princess Cruises celebrate three construction milestones of three “Royal” class ships at the Monfalcone shipyard
12:45 Dredging under Sea Port Sukhodol project to exceed 7 mln cbm – details to be covered at the Congress
12:08 Port of Oakland import volume increased 9 percent January 2019
11:46 8 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on February 14-15
11:27 Okskaya Sudoverf lays down seventh dry cargo carrier of Project RSD32M
11:08 DNV GL and Metalships & Docks ink class agreement for luxury sailing vessel
10:53 Throughput of Ukraine’s seaports in Jan’19 grew by 3.4% Y-o-Y to 11.19 million tonnes
10:29 Brent Crude futures price is up 0.63% to $64.98, Light Sweet Crude – up 0.57% to $54.72
10:08 EFIP welcomes the adoption of the European Parliament resolution on NAIADES II
09:41 Bunker prices are going up at the port of Saint-Petersburg, Russia (graph)
09:16 Baltic Dry Index up down to 628 points
09:07 ICTSI inaugurates the expansion of its Batumi International Container Terminal
08:07 MAN Energy Solutions wins contract to supply the engines for a new harbour tug in Spain
07:41 Inmarsat announces new initiatives to support maritime, ports and logistics start-ups with Rainmaking and Bluetech

2019 February 14

18:03 Austal's LCS 20 completes acceptance trials
17:44 Royal Navy to discuss the future of unmanned and autonomous naval warfare at SMi's 3rd annual Unmanned Maritime Systems Technology 2019
17:22 Freight turnover of Neva-Metal (Saint-Petersburg) in January 2019 fell by 26% Y-o-Y to about 190,000 tonnes
17:03 MOL Techno-Trade takes part in marine environmental protection program
16:25 VTB acquires 100% of Novorossiysk Grain Terminal from NSCP Group
16:03 Port of Virginia container volume up 8.9% to 134,638 TEU in January 2019
16:03 Expert expects uncertainty on global fuel market next week
15:49 “K” Line’s LNGC makes maiden call from Ichthys LNG Project to Naoetsu LNG Terminal in Japan
15:40 BSTDB to finance construction of Lavna coal terminal under agreement with STLC
15:21 2nd Conference “Dangerous cargoes: new transportation requirements” to be held under the auspices of RF Chamber of Commerce and Industry
15:03 ONE renewes own loading record exceeding 19000TEUs
14:33 Maersk and PBF Logistics LP announce agreement for production and storage of 0.5% sulphur fuel on the U.S. East Coast
14:02 Port of Long Beach volumes decrease 0.1 percent to 657,286 TEU in Jan 2019
13:50 Multipurpose Transshipment Complex to be built in Primorsk
13:32 Port of Los Angeles volumes up 5.4 percent to 852,449 TEUs in January 2019
13:02 Port of Rotterdam throughput volume up to 469.0 million tonnes in 2018
12:46 Supply vessel OCEAN COOPER 2 sinks in Singapore waters
12:25 Baltic Sea Region cruise ports commit to reducing negative ecological impacts
11:27 Bunker prices are flat at the Far East ports of Russia (graph)
11:09 Port of Marseille-Fos to deliver the first phase of the subsea cable landing infrastructure by Q3 2019
10:31 9 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on February 13-14
10:09 GTT receives an order from Samsung Heavy Industries for the tank design of a new LNG Carrier for Minerva Gas
09:44 Brent Crude futures price is up 0.66% to $64.03, Light Sweet Crude – up 0.58% to $54.21
09:25 Baltic Dry Index is up to 608 points
09:08 ABB to power Iceland’s first electric ferry ABB to power Iceland’s first electric ferry

2019 February 13

18:10 Shell and partners start deep-water production at Lula North in Brazil
17:46 OLT Offshore LNG Toscana Regasification Terminal works at almost full capacity
17:23 Excelerate’s Northeast Gateway Deepwater Terminal reached a peak send-out flow rate
16:58 Bunker sales at the port of Singapore in Jan’2019 fell by 8.9% Y-o-Y to 4.12 million tonnes
16:29 II HES and Dredging Forum to address deep-water routes to Sabetta and Novoportovsky terminal
15:57 Port of Singapore throughput in Jan’2019 fell by 2.4% Y-o-Y to 51.93 million tonnes
15:32 Throughput of Russian seaports in Jan'2019 grew by 5.6% Y-o-Y to 67.6 million tonnes of cargo (detalization)
15:05 Bank VTB acquired 50 percent minus one share in United Grain Company
15:04 NYK conducts crisis-response drill with ONE
14:56 DNV GL and Metalships & Docks ink class agreement for luxury sailing vessel