• 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)




2019 January 17

16:44 ABP invests £700K to boost storage at Port of Ipswich
16:27 Global fuel market: still many uncertainties in both demand and supply
16:22 CMA CGM announces FAK rates from ISC to North Europe and the Mediterranean
16:05 OCEAN Alliance extends duration of OCEAN Alliance to ten years
15:42 COSCO SHIPPING Ports signs agreement with PSA to add two new berths at the terminal in Boao, Hainan
15:31 Liebherr supports the 6th International Forum of Dredging Companies as its Sponsor
15:02 Ocean Yield ASA agrees to acquire a modern Suezmax tanker for a consideration of USD 56.0 mln
14:02 SEACOR Marine enters agreement to acquire three additional platform supply vessels from affiliates of COSCO Shipping Group
13:49 Throughput of Chinese ports grew by 4.2% to 9.22 billion tonnes in 2018
13:32 Jensen Maritime provides design for Shaver Transportation’s new tugboat
13:14 OOCL rolls out third phase of Ocean Alliance product refinements
12:50 Baltic Ports Organization’s schedule for 2019 is set
12:38 Port of Los Angeles breaks all-time cargo record in 2018
12:26 Qatar accedes to load lines convention
12:01 Sunseeker International and Rolls-Royce to present first production yacht with MTU hybrid power in 2020
11:51 Bunker prices continue going down at the Far East ports of Russia (graph)
11:38 Port of Zeebrugge handled 40.1 million tonnes in 2018
11:25 Nor-Shipping reveals stellar line-up for Ocean Leadership Conference
10:52 10 vessels escorted by icebreakers in eastern part of Gulf of Finland during 24 hours on January 16-17
10:28 NOVATEK’s hydrocarbon production totaled 548.4 million boe in 2018, up 6.9% Y-o-Y
10:03 Brent Crude futures price down 0.34% to $61.11, Light Sweet Crude – down 0.54% to $52.03
09:39 Tallink and Taltech to collaborate on developing smart ship solutions
09:17 Baltic Dry Index is down to 1,055 points

2019 January 16

18:36 Kongsberg Gruppen enters into an agreement with Rome AS to divest Kongsberg Evotec
18:06 Seaspan Corporation announces the closing of the second tranche of the $1 billion aggregate investment commitment by Fairfax
17:55 INEOS, Europe’s largest petrochemicals company, announces Antwerp as the location for its new ground breaking 3 billion Euro petrochemical investment
17:50 Throughput of Rostov-on-Don port in 2018 grew by 11.5% Y-o-Y to 24.1 million tonnes
17:36 Rolf A. Sandvik resigns as CEO of The Fjords
17:06 Digging begins in construction of new Antarctic wharf
16:52 Throughput of Russian seaports in 2018 grew by 3.8% Y-o-Y to 816.5 million tonnes (detalization)
16:31 IMO’s polar communication and navigation equipment guidance to be finalized
16:14 COSCO Shipping Lines launches Ocean Alliance 2019 service products
16:10 Ice restrictions at Passenger Port of Saint-Petersburg come into effect on January 25
16:05 Realogis publishes market report on the letting of logistics properties and industrial sites in the greater Hamburg area for 2018
15:46 Ice restrictions at Big Port of St. Petersburg come into effect on January 25
15:33 Verifavia Shipping cements leadership position for EU MRV and IMO DCS IT system certification
15:22 Throughput of Makhachkala Commercial Sea Port almost doubled in 2018 to 2.5 million tonnes
14:57 Houston, Texas will host the 3rd LNG USA Summit on 26-27 February 2019
14:31 Milan, Italy will host the 2nd Small-Scale LNG Summit on 12 February 2019
13:54 CHARLES ANDRÉ Group and Dunkerque-Port join forces to develop combined transport service from Dunkerque
13:25 Société Générale and MPA Singapore join SEA\LNG Board
12:58 Vladivostok Sea Fishing Port handled 4.54 million of cargo in 2018, up 14% Y-o-Y
12:33 VEB team got acquainted with Zvezda SBC production
12:09 ABS Advanced Solutions and Fleet Management Limited partner on cyber security
11:56 Engineers from Far Eastern Federal University provide scientific support of dry dock construction at Zvezda shipyard
11:30 Bunker prices at the Port of Saint-Petersburg, Russia show no significant changes (graph)
11:09 Port of Oakland cargo volume hit all-time high in 2018
10:52 3 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on January 15-16
10:35 ​IMO Secretary-General highlightes the need to consider seafarer training and standards
10:09 Fincantieri to build a new ship for Regent Seven Seas Cruises
09:57 Brent Crude futures price down 0.02% to $60.57, Light Sweet Crude – down 0.03% to $51.97
09:41 CMA CGM OCEANIA LINES - PAD service to resume weekly rotations
09:16 Baltic Dry Index is down to 1,096 points

2019 January 15

18:18 WMU investigated how the global transport industry will change as a result of automation and advanced technologies
17:52 ASCO Training Center achieved all targets set for 2018
17:27 Sovcomflot provides technical management for Marshal Vasilevskiy floating storage and regasification unit
17:00 Throughput of port Shanghai (China) climbed by 0.07% to 561.29 million tonnes in 2018
15:59 Bunker prices continue going down at the Far East ports of Russia (graph)
15:04 Equinor uses technical expertise from LR to lead a safety study assessment for significant offshore project in Brazil
14:44 Container throughput of port Hong Kong (China) down 5.4% to 19.64 million TEUs in 2018