• 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 August 18

16:51 USCG responds to ferry aground in Boston Harbor
15:09 NOAA awards $2.7 million in grants for marine debris removal and research
13:02 BAE Systems cuts steel for UK Royal Navy's HMS Cardiff
12:46 Kongsberg Digital simulation and software selected to fast-track R&D at new autonomous ship centre in Korea
11:05 NYK sponsors endangered Sea Turtle Research
10:56 Coast Guard cites passenger vessel for operating illegally, terminates voyage

2019 August 17

14:24 Kinder Morgan announces additional projects to enhance capabilities at Houston Ship Channel Facilities
13:31 Damen Shipyards Cape Town joins Women’s International Shipping & Trading Association
12:28 CMA CGM announces rate restoration for Asia to West Africa trade
11:32 APL informs on voil sailing on Asia-Indian Subcontinent Service in August
10:58 Pre-commissioned USCG's Cutter Midgett makes second cocaine seizure within five days

2019 August 16

18:16 Port of Vyborg volumes in Jan-Jul plummet 29% to 687,700 tons
18:06 Hapag-Lloyd announces rates from East Asia to North Europe and Mediterranean
17:36 Norwegian Encore leaves MEYER WERFT's building dock
17:06 Balltec secures North Sea decommissioning contract from Heerema Marine Contractors Nederland
16:35 Canada Infrastructure Bank signs MoU with the Port of Montreal on Contrecoeur port expansion project
16:05 Vår Energi AS awarded an EPCI contract to Rosenberg Worley AS
16:03 Low-sulphur marine fuel sales by Gazprom Neft in the first half of the year increased by 11% to 121,400 tonnes
15:48 Samsung Heavy to advance smart ship technology in cooperation with equipment producers
15:36 Throughout of oil port Primorsk in Jan-Jul 2019 increased 14% to 35.74 million tonnes
15:14 New mid-year record for container volumes through the Port of Vancouver
15:11 USCG repatriates 25 migrants to the Dominican Republic
14:27 Port of Vysotsk throughput in January-July rose 7% to 11.14 million tonnes
14:10 Austal signs A$126 mln contract to export two Cape Class Patrol Boats
13:14 Seven-month cargo volumes of Port of Ust-Luga increase 10% to 62 million tonnes (update)
13:05 NORDEN signs multiple long-term global contracts
12:05 APM Terminals Poti to implement uninterrupted 24/7 operations
11:39 Port of St. Petersburg seven-month volumes rise 2% to 35 million tonnes (update)
11:05 Steel cutting ceremony for the next AIDA LNG cruise ship at MEYER WERFT
10:48 Tekmar Energy selected for Formosa 1 Phase 2
10:44 Port of Hamburg seaborne cargo throughput up 4.1 percent to 69.4 million tons in H1 2019
09:55 Crude futures prices tend upward again: Brent Crude rises to $ 58,88, WTI – to $ 55,16
09:34 Baltic Dry Index leaps 97pts to 2047 points
09:27 Bunker prices show mixed movements at Port of St. Petersburg
08:41 MABUX: Bunker market this morning, Aug 16

2019 August 15

18:48 Seven-month box throughput of Ukraine’s seaports leaps 20% to 545.800 TEUs
18:05 Huntington Ingalls Industries announces leadership changes at shipyards
17:05 Scandlines installs Norsepower’s Rotor Sail solution on board hybrid ferry
16:43 Kinder Morgan announces additional projects to enhance capabilities at Houston Ship Channel facilities
16:35 Kalmar service expertise to enhance safety, performance and productivity at OPCSA’s Las Palmas terminal
16:33 Global Dredging Forum in London to address all current aspects of capital and maintenance dredging as expansion opportunity
16:05 Wilhelmsen Ship Management awarded two supramaxes from Stove Shipping AS
15:47 Neste introduces a new IMO2020-compliant low-sulphur marine fuel
15:43 Stena Bulk's CEO appeals directly to the Leaders of India, Russia, Latvia & the Philippines
14:33 Rotterdam Polymer Hub construction starts
14:20 A.P. Moller - Maersk reports strong improvements in earnings in Q2
14:01 Tuapse Sea Commercial Port JSC 1H net profit drops 3.3 times to RUB 1bn
13:52 Port of Oslo speaker to join Int'l Baltic Transport Forum, Sept. 11
13:05 RS supports PortNews сonference on icebreaking and service fleet, to be held prior to NEVA-2019 trade fair
13:02 CMA CGM announces FAK rates from Asia to North Africa
12:06 LUGAPORT terminal construction kicks off at Port of Ust-Luga
12:03 MOL transports fire engines to Paraguay
11:03 Jan De Nul bags 600MW Kriegers Flak contract
10:17 CMA CGM announces FAK rates from Asia to the Mediterranean
10:01 Crude futures prices continue to decline: Brent Crude – to $ 59,09, WTI – to $ 54,92
09:57 Latest frigate Admiral Kasatonov enters shipbuilder’s trials final phase
09:12 Baltic Dry Index leaps by 4.61% to hit 1950-pts mark
08:42 MABUX: Bunker market this morning, Aug 15

2019 August 14

23:00 Sergey Mazokhin takes helm at Nordic Engineering JSC
18:09 Icebreaker Novorossiysk escorts Silver Explorer along the Northern Sea Route