• 2018 January 11 16:12

    Bunker prices may continue upward trend supported by geopolitics

    The Bunker Review is contributed by Marine Bunker Exchange

    World fuel indexes rallied in the first weeks of 2018, supported by increased geopolitical risk and severely cold weather in the eastern U.S. But the risk of the correction also rose. On the demand side, expectations are that global economic growth will support solid oil demand growth. On the supply side, Venezuela’s dire situation, possible new sanctions on Iran, and increased tension in the Middle East mostly with the Saudi-Iran issues and the Iraq-Kurdistan standoff may take more volumes off the market than OPEC+ plans.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated insignificant irregular changes in the period of Jan.04 – Jan.11:
        
    380 HSFO - down from 375.93 to 373,64 USD/MT (-2.29)
    180 HSFO - down from 416,57 to 413,86 USD/MT (-2.71)
    MGO         - up from 630.64 to 634.36 USD/MT       (+3.72)


    It is expected that the return of geopolitical risks to the fuel market will be the major driver of potentially higher prices this year. A recent round of protests in Iran rose concerns that violence will roll over onto prized oilfields, but the government has largely preempted this scenario. President Hassan Rouhani believes the protests were spurned by his orthodox political opponents who sought to deny Rouhani any progress on personal liberties on the domestic front. Anyway, Iran’s Revolutionary Guard officially put an end to over a week of deadly protests in the country on Jan.07, though social media apps continue to be banned.

    Meantime, in a few days U.S. President may try to re-impose sanctions on Iran, a step that will certainly lead to more tension between the two countries and could increase sup-porting factor to fuel prices. Meantime, the Trump administration won’t have the backing of the international community in its anti-Iranian campaign, which will make isolation much more difficult. Goldman Sachs predicted that unilateral sanctions from the U.S. could affect a few hundred thousand barrels per day from Iran, but without help from the rest of the world, the effort would not curtail nearly the same amount of oil as the last time around. Besides, the increased threat of renewed U.S. banking/USD sanctions on Iran alone is likely to boost Iran’s interest in the new Yuan oil contract, and China will benefit considerably from such developments.

    OPEC produced 32.47 million bpd in December, essentially flat from a month earlier. Some notable declines came from Libya (pipeline outage), Saudi Arabia and Venezuela, while Nigeria boosted output. OPEC’s compliance rate for December stood at 121 percent, the same as November.

    Libya’s oil revenues nearly tripled in 2017 to US$14 billion (from US$4.8 billion in 2016) as the country managed last year to gradually recover its oil production, reaching 1 million bpd for the first time since 2013. Libya’s oil revenues represented more than 86 percent of its total income last year. After the main fields and oil export terminals in Libya re-opened in 2017, production started to increase and, together with Nigeria’s recovering oil production and U.S. shale resurgence, was offsetting part of the OPEC cuts and depressed fuel prices for much of 2017.

    Iraq plans to start exporting of up to 60,000 barrels per day to Iran from its northern Kirkuk oil fields by the end of January. The deliveries are to be made under a swap agreement announced in December by both countries. The shipment of oil from Kirkuk has been halted since Iraqi forces took back control of the oil fields from Kurdish forces in October.

    Venezuela’s oil output fell by another 100,000 bpd in December, dipping to just 1.7 million bpd, the lowest level since 2002. The drop off is steeper than prior monthly losses, and raise fears of an accelerated decline in 2018. That could lead to the cartel agreeing that re-stricting supply is no longer appropriate in a market that is significantly tighter than before the cuts started.

    The U.S. Energy Information Administration (EIA) in its Short-Term Energy Outlook for January predicts world oil demand in 2018 is set to grow by an additional 100,000 barrels per day. The forecast also said that the 2019 demand figure would stand at 101.76 million bpd—an increase of 1.65 million bpd from the current year. As per EIA, U.S. crude oil production is forecast to average 10.3 million bpd in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million bpd set in 1970. EIA forecasts U.S. production to increase to an average of 10.8 million bpd in 2019 and to surpass 11 million bpd in November 2019. There is high probability, that the oil market balance will not be achieved before late in the second half of 2018, as U.S. shale and growing supply from other non-OPEC producers (not part of the OPEC+ pact) will offset some of the cartel and allies’ production cut.

    The Trump administration has proposed to open up vast new territory for offshore oil and gas drilling, going so far as to push drilling in areas currently off limits. They include the Atlantic, Arctic and Pacific Oceans, as well as parts of the Gulf of Mexico. The five-year plan for 2019-2024 would replace the Obama-era plan for 2017-2022, and it would include 47 possible auctions that encompass more than 90 percent of the U.S. outer continental shelf. The proposal will take time to finalize and would be vulnerable to legal challenges.

    Russia is going to start moving more Urals crude eastward right after the launch of the East Siberia-Pacific Ocean pipeline extension, at a rate of 160,000 bpd. The overall increase of Russian crude shipments to China could be around 200,000 bpd. This means less oil for Europe, which is Russia’s number-one oil client. In 2016, Russia exported an average 3.7 million barrels daily to European countries, compared with less than a million bpd to China. The proportion could change drastically very soon, which may set up another round of rally for oil and fuel prices in Europe.

    Earnings for supertankers that move oil around the world fell by more than half in 2017, in large part because of the OPEC cuts. The number of cargoes from the Middle East to Asia reduced significantly at a time when a large number of newly-built vessels are being delivered. Earnings per day fell to $17,794 on average in 2017, the lowest figure since 2009. The poor conditions for the oil tanker industry are set to continue this year, with capacity expected to expand by another 4 percent at a time when OPEC will continue to hold back supply.

    In fact, market believes more of the same – inventory declines, some shale growth, a gradual increase in the oil price and eventually an end to the OPEC deal. But still a lot of uncertainty factors remain. We expect bunker prices may still continue slight upward trend in a near-term outlook.

     

     

     

     

     

     

     

    * MGO LS
    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)




2018 April 19

14:33 Maersk delivers new block train solution on Standard Gauge Railway
14:11 Global bunker market: the state of volatility remains, expert says
14:03 Samskip starts new service from Poland, Lithuania and Norway
13:20 Bibby Offshore becomes the first to deploy a pioneering diving safety system in the North Sea
13:17 Damen Dredging Equipment launches new DOP Dredger Series
13:11 Draft rules for collection of port investment due is available for public discussion (document)
12:52 Wärtsilä to provide optimised maintenance for a complete fuel gas handling system for Viking
12:08 6th Forum of Intermodal Transport FRACHT 2018 held in Gdańsk on 11-12 April
11:13 Port of Rotterdam: growth in container throughput continues in first quarter
10:49 Port of Riga introduces new cargo handling technologies
10:15 Experts forecast Russia's LNG exports to make 33 to 62 million tonnes by 2030
09:52 Brent Crude futures price up 0.6% to $73.92, Light Sweet Crude – up 0.55% to $68.85
09:34 Baltic Dry Index up to 1,124 points
09:24 APM Terminals launches integrated cold chain solutions in India
09:17 Bunker prices show no significant changes at the Far East ports of Russia (graph)

2018 April 18

18:26 Engine room fire on board Finlandia Seaways quickly under control
18:05 Ports of Long Beach and Los Angeles offer seed money to foster the development of new goods-movement technologies that improve air quality
17:47 Port of Rotterdam Authority launches new Pronto application
17:25 CMA CGM implements FAK rates from East Mediterranean ports to Gulf and Red Sea
16:55 Royal IHC announces successful launching of BONNY RIVER in China
16:16 RZD Logistics and Fenix will develop transit cargo transportation via port Bronka (photo)
16:05 Jumbo names new offshore vessel Stella Synergy
15:28 Samskip brings Rotterdam into Nor Lines' flexible LNG-powered service network
15:05 CMA CGM implements GRR from Asia to West Africa
15:02 Baltiysky Zavod shipyard tested mooring facilities of Akademik Lomonosov FPU (photo)
14:59 Port of Long Beach container cargo volumes swell 14 percent in March 2018
13:37 Kazmortransflot LLP takes delivery of final Damen Shoalbuster 2709 for Caspian Sea operations
13:08 Commercial Sea Port of Ust-Luga purchased Liebherr crane as part of Yug-2 terminal modernization (photo)
12:35 Crowley completes acquisition of three SeaRiver tankers
11:47 Major ASW ships Severomorsk and Vice Admiral Kulakov practise search for submarine in Barents Sea
11:19 USC: Import substitution and localization in shipbuilding is hindered by undeveloped service offer
10:50 Russia and Japan ink MoC on mutual recognition of seafarers’ diplomas (photo)
10:25 Brent Crude futures price up 0.54% to $71.97, Light Sweet Crude – up 0.51% to $66.86
10:09 FLEX LNG LTD signs one year time-charter with Enel
09:48 CMA CGM welcomes IMO's decision to reduce by 50% the industry’s CO2 emissions in 2050
09:33 Bunker prices are flat at the Port of Saint-Petersburg, Russia (graph)
09:14 Baltic Dry Index up to 1,052 points

2018 April 17

18:06 Management of Azerbaijan Caspian Shipping Company met with seafarers of the Company’s Offshore Fleet
17:57 RF Navy's major landing ship Minsk visits Lisbon port
17:35 For the first time, more than 30 ports certified with EcoPorts PERS environmental standard
17:05 MAN Diesel & Turbo wins major container vessel order
16:35 Konecranes Gottwald Mobile Harbor Crane for Italian multi-purpose terminal
16:30 Port of Antwerp freight volume up 7.1% to 58,328,678 tonnes in Q1 2018
16:20 Reconstruction and modernization of Yug-2 terminal at the port of Ust-Luga to increase its annual capacity to 20 million tonnes by 2020
16:05 The world’s largest plug-in hybrid ship begins to take form
15:24 Rolls-Royce to supply innovative autocrossing system and propellers to 13 new ferries
15:05 DNV GL launches alternative fuels white paper
14:13 Inland container shipping sector consultations facilitated by Port of Rotterdam Authority yield tangible results
13:20 The Panama Canal “adrift” due to safety concerns
12:58 Authorities and researchers to seek solutions to Arctic navigation
12:15 PowerCell’s fuel cell technology will make vessels emission-free
12:02 Bunker prices are flat at the Far East ports of Russia (graph)
11:44 Wan Hai Lines to launch Indonesia to Singapore / Malaysia service
11:31 HII awarded contract for DDG 51-Class follow yard services
11:23 Malta Freeport orders fifteen Konecranes RTGs
11:03 Vostochny Port JSC exported 6 million tonnes of coal YTD (photo)
10:24 Brent Crude futures price up 0.55% to $71.80, Light Sweet Crude – up 0.63% to $66.64
10:00 Throughput of port Kaliningrad in 3M’18 up 13% Y-o-Y to 3.56 million tonnes
09:36 Throughput of port Vysotsk down 3% to 4.52 million tonnes in 3M’18
09:17 Baltic Dry Index up to 1,025 points