• 2019 February 7 16:38

    Expert says global fuel market continues looking for some firm direction

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have demonstrated slight irregular fluctuations this week. The market is being boosted by optimism over the higher-level trade talks between the United States and China that were completed on January 31. Also underpinning the market is strong adherence to the OPEC-led supply cuts during January. Meantime, a number of events fuelled a two-sided trade including a tightening of U.S. supply and the announcements of U.S. sanctions against Venezuela. Weak manufacturing data from China also weighed on prices as well as a dovish outlook by the U.S. Federal Reserve.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), has demonstrated slight upward trend in the period of Jan.31 – Feb.07:

    380 HSFO - up from 388.00 to 398.43 USD/MT (+10.43)
    180 HSFO - up from 427.07 to 442.14 USD/MT (+15.07)
    MGO         - up from 605.50 to 617.14 USD/MT  (+11.64)


    Reuters expects that oil prices will struggle to gain much upward traction this year, as concern about the global economy and growth in U.S. crude supply could offset a boost from OPEC production cuts and sanctions on Iran and Venezuela. The survey forecast Brent crude oil futures to average $67.32 a barrel in 2019, down from the $69.13 projected in the previous monthly report. This is the third consecutive month in which analysts have cut their oil price forecasts. Global oil demand is seen growing by between 1.1 and 1.7 million barrels per day (bpd) in 2019, mostly in line with the International Energy Agency's 1.4 million bpd forecast, but it will largely depend on the economy.

    OPEC oil supply has fallen in January by the largest amount in two years. Cartel has pumped 30.98 million barrels per day last month, down 890,000 bpd from December and the largest month-on-month drop since January 2017. It is supposed that Saudi Arabia and its Gulf allies over-delivered to avert the possibility of a new glut building up this year. A formal accord by OPEC and its allies to cut supply in 2019 took effect on Jan. 1.

    As per Russia’s Finance Ministry, Russian oil production has not yet reached its peak and expectations that it could decline in the next few years are not justified. The government may take necessary steps if it saw risks of a decline in oil production. Russia’s energy ministry in turn said that Russian oil output could fall significantly in the next few years if some tax and other measures are not taken.  Meantime, Russia’s production last month declined to 11.38 million barrels per day (bpd), but that was only down by 35,000 bpd from its October 2018 level that is the baseline for the pact.

    China’s independent refiners imported a combined 2.72 million bpd of crude oil in January, down by 8.7 percent from December. In recent weeks, however, independent refiners have started to buy more crude that will arrive in China in March and April, as they are looking to buy more crude for March and April delivery to restock supplies while oil prices are still relatively low. The buying in recent weeks has pushed up spot premiums for the independent refiners’ favorite crude grades from Russia, Oman, Africa, and Europe to between $0.50 and $1 higher than quotes from early January.

    European countries have set up the special payment channel to handle trade with Iran that would allow transactions with Iran, including oil, as the European Union (EU) still works to salvage the nuclear deal with Iran. The payment channel calls Instrument in Support Of Trade Exchanges (INSTEX). INSTEX will be based in Paris and managed by an experienced German banker, while the UK will chair the vehicle’s supervisory board. There is debate over how effective this new payment channel will be, but politically it is symbolically important, both in terms of Europe laying down a foreign policy independent of the U.S., and as a means to keep the Iran nuclear deal alive.

    The U.S. government is considering a release of oil from the strategic petroleum reserve (SPR), timed with potential outages from Venezuela. Venezuela has exported roughly 500,000 bpd to the U.S., and because of American sanctions, those volumes are now in jeopardy. The only problem is that the SPR does not contain heavy crude. U.S. refiners that import heavy oil from Venezuela are now looking for alternatives. Canada and Mexico have heavy oil, but have little scope to increase supply. Already the market for heavy oil is tight while that for lighter oil is much looser.

    At the same time, Venezuela’s oil production will likely fall 18 percent to around 900,000 barrels per day due to pressure from U.S. sanctions and lack of materials for workers. However, it is expected that waivers will ease the full impact of the sanctions until they expire. At the moment, Venezuela produces around 1.1 million bpd of crude, which is the lowest in several decades. For the global fuel market, the crisis in Venezuela presents a series of problems. If Maduro hangs on and the U.S. continues to lend more pressure on his government, Venezuelan oil production and exports will continue to fall. Alternatively, the U.S. is hoping for a quick regime change, after which it would lift sanctions, which it believes will lead to a reversal in output losses.

    The oil market received a boost from the U.S. Federal Reserve last week, which signaled that it would essentially suspend its plans to hike interest rates this year. Fed chairman Jerome Powell said that economic growth remained solid but that the central bank had the luxury of patience when deciding on further rate hikes. That is a big change from prior guidance, in which the Fed very clearly outlined multiple rate increases in 2019.

    It was also reported a sharp drop in the number of active oil and gas rigs in the United States last week. The total number of active oil and gas drilling rigs fell by 14 rigs, with the number of active oil rigs falling by 15 to reach 847 and the number of gas rigs increasing by 1 to reach 198. The oil and gas rig count is now 99 up from this time last year, 82 of which is in oil rigs. Average weekly U.S. crude oil production remained at the record 11.9 million barrels per day (bpd) for the fourth week in a row. However, signs that U.S. shale drilling growth could slow down lent some support to fuel prices.

    Outlook for the coming week

    Fuel prices remain volatile after the announcement of the latest round of sanctions by Washington against Caracas, but for now the concern about a shortage is being offset by the production cuts OPEC and Russia agreed at the end last year. We expect bunker prices will continue slight upward trend next week while global fuel market will continue looking for some firm direction.

     

     

     

     

     

     

     

    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)

    Product

    Close Feb. 06

     

     

    Light Crude Oil (WTI)

    $54,01

    Brent Crude Oil

    $62,69




2019 July 19

18:10 NYK holds fleet safety promotion conferences for shipowners and ship-management companies
18:04 Incat Tasmania exports new 111 metre ferry to Spain
17:49 World's largest air-cushioned landing craft takes part in Navy Day parade rehearsal in Baltiysk
17:25 Caspian Flotilla ship crews prepare for Naval Parade
17:03 FortisBC secures first export contract for Tilbury LNG facility
16:22 Project documentation for construction of Nizhny Novgorod hydroengineering facility completed - Victor Vovk
16:03 CMA CGM announces GRR from Asia to East and South Africa
15:50 East Mining Company to invest RUB 11.5 billion in development of its coal project in Sakhalin
15:33 Moby names Damen ASD Tug 2813 Vincenzino O. in Cagliari
15:12 Cargotec posts financial report for January–June 2019
14:47 Blagoveshchensk shipyard completed state trials of hydrographic survey vessel of Project 19910
14:33 NYK recognized for implementation of advanced navigation support tool
14:12 Global Ship Lease announces new charter agreement
13:51 150 graduates of Moscow State Water Transport Academy awarded with diplomas
13:30 RF Government includes NOVATEK’s LNG terminal project into area planning scheme
13:12 Port of Long Beach releases draft Master Plan update
13:07 Epic Gas Ltd. completes acquisition of two vessels of four LPG carriers
12:24 USCG finds federal fisheries violations aboard 5 recreational fishing vessels
12:11 IMO Council condemns tanker attacks in Strait of Hormuz and Sea of Oman
11:31 Naval Group reports order intake growth in H1 to 3.9bn euro
11:14 Ice-breaking LNG carrier for Yamal LNG Project named NIKOLAY URVANTSEV
10:58 Minister of Transport of Malaysia visits World Maritime University
10:26 Saudi Arabia accedes to two important IMO treaties
09:55 Bunker prices are slightly down at the port of Saint-Petersburg, Russia (graph)
09:50 MABUX: Bunker market this morning, July 19
09:33 Brent Crude futures price is up 1.91% to $63.11, Light Sweet Crude – up 1.48% to $56.12
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2019 July 18

18:05 Future expectations for MPS Terminal 3 in the port in Tema outlined with Government delegation
17:24 PGNiG acquires interest in another gas field in the North Sea
17:18 DNV GL supports 2020 sulphur compliance with online Ship Implementation Plan
17:05 OOCL announces new Middle East / Indian Subcontinent – North Europe Service
16:35 Consortium including DEME and Jan De Nul explores pioneering high-wave offshore solar technology
16:07 Large maritime market players join hands to create high-wave offshore solar panels
15:52 State Duma makes it easier for foreign tourists to visit Russia’s Arctic
15:35 Incat Tasmania delivers new 111-metre ferry to Spain operator Naviera Armas
15:18 Hapag-Lloyd launches South-East India – Europe Express Service // IEX to start operations in October 2019
15:01 Operation ATALANTA welcomes ESPS CANARIAS
14:26 Bunker prices are slightly down at the Far East ports of Russia (graph)
14:00 Diana Shipping announces time charter contract for m/v Selina with Ausca
13:44 PortNews Media Group's anniversary celebration photo release
13:22 Aleksey Khaidukov as President of Novoship
13:00 Global Ports Holding invites proposals for Duty Free and Travel Retail operations at Malaga, Zadar, Cagliari and Catania cruise ports
12:47 East Mining Company eyes arranging offshore transshipment of coal in Kamchatka under Tata project
12:09 Wärtsilä posts financial results for January-June 2019
11:53 Construction of LNG-powered icebreakers to be financed by NOVATEK – Vyacheslav Ruksha
11:31 RF Deputy PM Maksim Akimov set a task to begin dredging in the Gulf of Ob not later than on 1 August 2019
11:09 Port of Muuga strengthened with new ferry connection to Finland
10:48 Primorsky MRC terminal to offer fully closed transshipment of loose cargo
10:30 MAN Energy Solutions gets subsea compression FEED order from Chevron
10:09 Port of Lowestoft names new state-of-the-art pilot boat
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2019 July 17

18:13 USCG responds to boat collision, assists 4 injured
17:55 LNG vessels to protect environment and increase container turnover at the Port of Riga
17:32 YAMAL LNG obtains certification for the new ISO 45001:2018 and confirms compliance with ISO 14001:2015
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