• 2018 April 19 14:11

    Global bunker market: the state of volatility remains, expert says

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have been rather volatile during the week. First, the possible trade war posed a threat to demand. However, in the beginning of the week geopolitical concerns over a military strike in Syria and possible fallout across the Middle East compensated concerns over surging U.S. shale production and over a potential downside to global oil demand. At the moment, there appears to be no escalation of the conflict with Russian and Iranian forces, after the U.S. and allies the UK and France launched attacks against Syria.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) demonstrated slight upward trend in the period of Apr.12 – Apr.19:
        
    380 HSFO - up from 381.57 to 387,29 USD/MT (+5.72)
    180 HSFO - up from 422,71 to 427,36 USD/MT (+4.65)
    MGO        - up from 654.36 to 660,93 USD/MT (+6.57)

    There was a number of forecasts have been published by leading international organisations during the week.

    The International Energy Agency (IEA) reported that OPEC and its allies appeared to have accomplished their mission of bringing global oil stocks to desired levels. As per IEA, OECD commercial stocks dropped by 26 million barrels in February and were just 30 million barrels above the five-year average at end-February. The average could be reached by May, on the assumption of tight balances in 2Q18. The IEA report followed up OPEC's monthly release on April, 12 that said the global oil inventory surplus is close to evaporating. The IEA report also confirms the monthly data from OPEC earlier last week, which showed the group's output declined by 201,000 in March – the factor supporting global fuel indexes.

    The IEA also said that the U.S.-China trade war could result in lower oil demand. The agency kept its forecast of oil demand growth at 1.5 million barrels per day (bpd) but noted that the trade war represented a serious downward risk to that projection. As per the IEA, a 1 per-cent decline in global GDP growth would translate into lower oil demand growth by 690,000 bpd.

    Barclays in turn significantly tightened its forecast for Venezuelan production, lowering it to 1.1-1.2 million barrels per day (bpd), down sharply from its previous forecast of 1.4 million bpd. That helped guide the bank’s upward revision for its price forecast for both WTI and Brent in 2018 and 2019, a boost of $3 per barrel. Bank also said that the explosive growth of U.S. shale keeps the market well supplied, and ultimately forces a downward price correction in the second half of the year. Meantime, one of the supply risks is the potential confrontation between the U.S. and Iran. The re-implementation of sanctions threatens to cut off some 400,000 to 500,000 bpd of Iranian supply.

    Goldman Sachs noted that the sudden spike in geopolitical tension only reinforces its prediction of a 10 percent increase in commodity prices over the next 12 months. Talking about the risk of a disruption of Iranian supply, Bank considers that U.S. sanctions could force European refiners to reduce their purchases of Iranian oil, but the real question is if Iranian oil is simply rerouted to Asia or if Iran is forced to incur cutbacks. The effectiveness of U.S. sanctions on shipping insurance might be the key to answering this question.

    U.S. President Donald Trump has threatened to pull out of a nuclear deal be-tween Iran and six major powers by May 12 unless Congress and European al-lies help fix it with a follow-up agreement. If Iranian production does decline following the reintroduction of sanctions, this could push fuel prices up.

    Geopolitical tensions have returned after the United States, France and Britain launched 105 missiles on Apr.14, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7. Meantime, as far as developments in Syria are concerned, the market has had a sigh of relief in the sense that there is no escalation, either diplomatically, or on the ground. Although Syria itself is not a significant oil producer, the Middle East is the world’s most important crude exporter and tension in the region tends to put oil/fuel markets on edge.

    For fuel prices, much also depends on what OPEC decides at its June meeting. All recent signs point to an extension of the supply curbs through the end of this year, and perhaps through the first half of 2019 as well. OPEC countries appear more determined than ever to erase the supply surplus. Much of the motivation comes from Saudi Arabia, OPEC’s most influential member, who reportedly wants $80 per barrel to increase the valuation of Saudi Aramco.

    Venezuela’s production fell by 55,000 barrels per day in March, to 1.488 million bpd. Analyst consensus is that Venezuela is unlikely to pull out of this tailspin. In fact, Venezuela’s position is likely to worsen, with Venezuelan refineries expected to close due to crude shortages and underinvestment. This drop in production is bound to support higher fuel prices.

    U.S. drillers added seven oil rigs in the week to April 13, bringing the total count to 815, the highest number since March 2015. The data underscored worries that rising U.S. output could potentially derail OPEC's effort to end a supply. Domestic oil production - driven by shale extraction - rose to an all-time high of 10.54 million bpd last week, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.

    The White House is reportedly preparing new tariffs on China as it tries to step up the pressure on Beijing. The U.S. will also draw up prohibitions on Chinese investment in advanced U.S. technology, whether by acquisition, joint ventures, licensing or any other arrangement.

    Even as OPEC has apparently achieved its goal of draining surplus stocks, the group seems set on keeping the cuts in place through the rest of this year. Meanwhile, fuel prices may face a correction as U.S. production continues to surge and the market has already priced in the potential of renewed sanctions on Iran as well as a further Venezuela production drop. We suppose bunker prices may continue 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)




2018 May 24

18:07 ZIM posts Q1 2018 results
17:31 Bureau Veritas publishes vital resource for decommissioning industry
17:24 Italy’s first, fully-automated gantry cranes reach Vado Ligure
17:17 Best quarter performance ever at CTSP terminal: 168,500 TEUs, a 7.8% container traffic growth
17:09 Successful testing programme with enhanced Wärtsilä’s navigation systems promotes operational safety and efficiency
16:57 MSC optimises its Transpacific-USWC network
16:15 MABUX: Bunker prices continue upward trend
15:12 UCL Port’s 1Q volumes decline 3.9% Y/Y to 9.4 million tonnes
15:10 ABS evaluation demonstrates feasibility of LPG as fuel strategy for Dorian LPG
14:58 MAN to equip world’s first LNG-powered fishing trawler
14:55 VARD secures contract for one stern trawler for Nergård Havfiske
13:06 TCSP Group’s 1Q volumes fall 8.4% Y/Y to 3.88 million tonnes
12:08 Sea Port of St. Petersburg sees strong growth in 1Q volumes
09:26 Baltic Dry Index drops 37pts to 1162 points
09:08 akquinet and IDENTEC SOLUTIONS join forces to revolutionize refrigerated container management
08:39 Maersk Line starts new transatlantic service between Europe’s Mediterranean region and Canada
08:34 Compagnie Maritime Monégasque and Damen join forces to introduce Fast Marine Access in Brazil

2018 May 23

17:54 Container Terminal Saint-Petersburg invested RUB 256 million in modernization of its facilities in QI’2018
17:27 Greece suggests arranging cruise lines to Russia
17:00 Rosmorrechflot comes out for replacement of shipbuilding subsidies with cheap financing
16:16 Agreement on Enhancing International Arctic Scientific Cooperation enters into force
15:48 New Belgium container connection bolsters Port of Hull
15:25 DALO chooses SARIS to support SAR operations
15:03 FESCO transports three transformers from Novorossiysk for Moscow central heating and power plants
14:42 Ukraine’s water transport carried 0.3 million passengers in 4M’18, down 3%, Y-o-Y
14:21 Hapag-Lloyd update on restrictions for DG cargo handling at FIFA World Cup in Russia
13:59 Cargo transportation by Ukraine’s water transport fell by 18.5% to 1.0 million tonnes in 4M’18
13:36 SASCO BoD elected Aleksey Pavlov as Director General of the company
13:13 “K” Line announces delivery of special coal carrier “CORONA XANADU”
12:52 Tallink Grupp to list shares also on Helsinki Stock Exchange
12:31 Rosmorport appoints Sergey Lyamtsev as Acting Director of its Azov Basin Branch (photo)
12:13 MPC Container Ships ASA acquires three 2,500 TEU feeder container vessels
11:43 Strong programme raises profile of The Maritime Standard Ship Finance and Trade Conference
11:18 Gunvor forms new ship holding jv СlearOcean Tankers
10:50 Port of Singapore throughput in 4M’18 grew by 1.1% Y-o-Y to 207.78 million tonnes
10:28 Brent Crude futures price down 0.63% to $79.07, Light Sweet Crude – down 0.4% to $71.91
10:09 Diana Shipping announces time charter contract for m/v P. S. Palios with Koch
09:55 Okskaya Sudoverf lays down lead multi-purpose dry cargo carrier of Project RSD32M
09:52 Container shipping is smart to collaborate on standards, says MSC CIO
09:15 Baltic Dry Index up to 1,199 points

2018 May 22

18:37 CMA CGM announces GRR from India and Sri Lanka to West Africa
18:07 Great Lakes Dredge & Dock Company adopts ABS Subchapter M regulatory compliance mobile software
17:47 Container throughput of port Hong Kong (China) down 2.8% to 6.49 million TEUs in Jan-Apr’18
17:33 Suez Canal revenues up to 479.3million dollar in April
17:26 Severnaya Verf starts cutting metal for initial section of longline factory vessel (photo)
17:05 Med Marine signs two new design contracts with Robert Allan
16:28 Okskaya Sudoverf launches second shallow-draft barge of Project ROB20, Belmax 2 (photo)
16:05 Bibby Offshore secures multimillion North Sea contract
15:50 RF Ministry of Justice registers order on designation of caution areas in ports of cities hosting World Cup 2018
15:34 New generation of RoRo’s designed by KNUD E. HANSEN for Grimaldi
15:04 Iridium network approved to provide Global Maritime Distress Safety System (GMDSS) services
14:39 North West MP finds out more about how the Port of Barrow is powering the region
14:10 Rosmorport continues providing icebreaker assistance in the Arctic Basin
13:45 Bunker prices are going up at the Far East ports of Russia (graph)
13:21 Van Oord marks 150th anniversary with christening of SRI vessel Bravenes
12:42 IMO approves joint RF/USA proposal on regulation of shipping in the Bering Strait (photo)
12:23 Wärtsilä LNGPac passes 100th order milestone
12:14 Jotun Australia is formally open for Yacht business with complete yacht coating solutions
11:30 ABS Nautical Systems chosen as exclusive mobile compliance solution for Crosby tugs
11:26 Baltic icebreaking season 2017-2018 ends