• 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 October 20

08:47 Boskalis, Van Hattum en Blankevoort and Mobilis construct deep-sea quay for the new HES Hartel Tank Terminal at Maasvlakte
08:10 Navios Partners announce filing of F - 1 for direct listing of Navios Containers
08:06 Maersk Line increases FAK rates for Northern Europe to Middle East and ISC trade
08:04 U.S. Navy contracts Austal to order materials for EPF 13
07:44 EU Commission launches the European Network of U-space Demonstrators

2018 October 19

18:42 ABN AMRO, Samsung SDS and the Port of Rotterdam Authority launch container logistics blockchain pilot
18:07 Stena Line's battery hybrid vessel completes its first month of operation
17:56 ABN AMRO, Samsung SDS and Port of Rotterdam Authority launch container logistics blockchain pilot
17:35 Port of Gdansk participated in the CILF 2018 fair in China
17:11 Gdansk pays a visit to Singapore
16:57 Testbed established for Internet of Ships Open Platform
16:48 Finland’s Water Transport Act aims to improve safety and increases preparedness for the future
16:26 World’s largest LNG bunker supply vessel “Kairos” started its voyage to Europe
16:04 KN will motivate its employees with the company's shares
15:42 New Falck training centre on the Maasvlakte officially openes
15:20 Seimas members visiting Klaipėda discussed benefits provided by LNG terminal
14:59 Ukraine plans dredging of 16.33 million cbm of material in 2019
14:37 UN agencies delivering on maritime security
14:15 Hapag-Lloyd starts new Red Sea service
14:00 Atomflot: shipments from Arctic LNG and Yamal LNG to be assisted by diesel and gas powered icebreakers
13:31 MOL's newbuilt LNG carrier "MARVEL EAGLE" to transport LNG from Cameron project in U.S.
13:11 NIBULON Shipbuilding and Repair Yard launches POSS-115 Project tug
13:05 BigLift Barentsz sails Northern Sea route for Pioneering Spirit
12:48 Glavgosexpertiza approves reconstruction of KSK grain terminal to increase its capacity to 4 million tonnes
12:22 Q&A with ImageSat International released ahead of SMi’s 4th annual Maritime Reconnaissance and Surveillance Technology conference
12:05 FESCO wins tender for supplying Indian Research Stations in Antarctica in 2019
11:43 Competition for designing and construction of LNG-powered icebreaker to be announced in late 2018 - early 2019
11:20 North Sea Giant turns to The Switch EBL technology
10:54 NOVATEK to place four FLNG facilities on the Northern Sea Route
10:31 RF Navy’s major amphibious ship Ivan Gren enters North Sea
10:07 Port of Vancouver closes 2018 cruise season
09:56 Brent Crude futures price up 0.4% to $79.61, Light Sweet Crude – up 0.35% to $68.89
09:38 Tackling maritime emissions - IMO rolls out ship and port toolkits
09:29 Expert forecasts more favorable ice situation on Northern Sea Route for 30 years ahead
09:15 Baltic Dry Index is up to 1,565 points
09:07 Hapag-Lloyd, CMA-CGM and COSCO enhance GEM service - covering Mediterranean with the Middle East / ISC
08:37 Samskip launches Netherlands-Italy multimodal rail service
08:07 SEA\LNG submits open comment on the draft supplemental environmental impact statement for Puget Sound LNG facility
07:20 Van Oord awarded offshore contract for the West White Rose Project

2018 October 18

18:03 VSDV opens new crossdock location in the port of Amsterdam
17:33 The first vessel in Klaveness Combination Carriers next generation of combination carriers named at New Yangzi Shipyard in China
17:17 Cargo transportation via Northern Sea Route can reach 17 million tonnes in 2018
17:03 Savannah container trade up 12 percent in September 2018
16:55 PGRK: sales strategy of Pavlovskoye deposit project is focused on foreign markets
16:33 SITC Logistics Group signs strategic cooperation agreement with Chengdu Port Investment Group and Guangzhou Port Logistics Group
16:03 NYK and Horiba to develop a new sulfur-in-oil analyzer for ships
15:34 Thames freight volume rises by 40% as Thames Vision strategy starts to bear fruit
15:33 Port of Rotterdam Authority and research institute TNO present results of the study at IMO meeting
15:31 Dublin Port volumes grow by 4.7% in first nine months. By year end, 36% growth in just six years
15:03 Chinese Lingang group invests 85 million euros in Zeebrugge inner port
14:47 Practical aspects of LNG bunkering to be discussed at the dedicated conference in Moscow on October 24
14:33 Nouryon, Tata Steel, and Port of Amsterdam partner to develop the largest green hydrogen cluster in Europe
14:24 Bunker prices may change irregular next week amid rising volatility on global fuel market, expert says
14:11 Tallink and Rauma marine constructions sign letter of intent for the construction of new shuttle ferry
14:02 VesselMan and DNV GL team up to offer optimized solution for dry-docking management
13:30 Project Forward paves the way for meeting IMO’s reduction on CO2 emissions
13:14 Equinor’s share saving plan allocates shares
13:02 Damen Shipyards Group and Abu Dhabi Ports sign contract for two Damen ASD Tugs 2411
12:52 Volumes transported by TransContainer’s flatcars and containers grew by 5.1% Y-o-Y to 1.38 million TEUs
12:43 Diana Shipping announces direct continuation of time charter contract for M/V Astarte with Glencore