• 2018 November 15 16:52

    Expert says downward trend in bunker prices may continue next week

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have continued downward evolution this week. Conflicting signals demonstrate a new level of uncertainty in global fuel market. After many media reports claimed that Iranian oil exports had been falling sharply and steadily, data now suggests the fall has been less steep-a fact immediately weighing on oil and fuel prices. Saudi Arabia is trying hard to stop the price declines, but it is going to need to convince OPEC+ to do more at the upcoming meeting in three weeks’ time.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), demonstrated firm downward trend in the period of Nov.08 – Nov.15:
        
    380 HSFO - down from 463.71 to 433.79 USD/MT (-29.93)
    180 HSFO - down from 511.79 to 485.50 USD/MT (-26.29)
    MGO         - down from 709.29 to 675.07 USD/MT  (-34.22)


    OPEC+ meeting on Nov.11 yielded no formal change in supply policy, but did acknowledge that new strategies might be needed. Meantime, Saudi Arabia said OPEC and its allies should reverse about half the increase in oil output they made earlier this year as fears of shortages are supplanted by concerns about oversupply and collapsing prices.  Producers need to cut about 1.4 million barrels a day from October production levels. The kingdom will reduce shipments by about half that amount next month. OPEC and Russia added almost 2 million barrels a day to the market between May and October. While they were willing to take that action to ease prices and shield themselves from attacks from the U.S., many countries also need the value of a barrel to stay high enough to balance their budgets.

    Meantime, total OPEC production jumped in October, as Saudi Arabia and the UAE more than offset the declines from Iran. Iran saw production fall by 156,000 bpd, and Venezuela suffered another 40,000-bpd monthly decline. But Saudi Arabia added 127,000 bpd and the UAE added 142,000 bpd. Combined the entire group’s production edged up by 127,000 bpd. As the market expected supplies to tighten due to Iran sanctions, the increase has helped push down crude oil prices.

    Russia’s oil production is at a post-Soviet record high, but a cut in output may actually work to the benefit of Russian producers as producing less at $80 per barrel is better than producing at current levels and at $70 per barrel. A certain output decline will also help the companies to reduce operating costs and further improve their financials, including free cash flow

    Russian oil exporters are pressuring Western commodity traders to pay for Russian crude in euros and not dollars as Washington prepares more sanctions. This approach could undermine the dominance of the U.S. dollar as the global oil trade currency. Early indications of this undermining became evident this spring, when Russia and Iran launched an oil-for-goods exchange program seeking to eliminate bilateral payments in U.S. dollars and plan to keep it going for five years. Besides, Venezuela is also going to present its cryptocurrency, the Petro, to OPEC as a unit of account for oil trading next year, and China is also openly promoting its currency for oil trade and all trade.

    France in its turn aims to lead the European Union (EU) efforts in defying U.S. sanctions on Iran, by supporting the creation of a payment mechanism to keep trade with Iran and making the euro more powerful. The EU has been trying to create a special purpose vehicle (SPV) that would allow to continue buying Iranian oil and keep trade in other products with Iran after the U.S. sanctions were implemented. However, the block is struggling with the set-up, because no EU member is willing to host it for fear of angering the United States. Besides, on Nov.05 the Belgium-based international financial messaging system SWIFT said that it would comply with the U.S. sanctions on Iran and would cut off sanctioned Iranian banks from its network, which made the EU’s attempts to defy the U.S. sanctions more complicated.

    Iran claimed its army is ready to protect its commercial fleet, including crude oil tankers, from any threats. It was kind of response to last week’s U.S. advisory to all countries and ports doing business with Iran that Iranian ships are a floating liability. As per statement, self-insured Iranian tankers engaging in unsafe behavior with many tons of crude oil onboard is courting environmental and financial disaster. Iran in turn is going to file a complaint at the International Maritime Organization (IMO) over the sanctions on maritime transportation from the United States. Meantime, oil tankers bearing the Iranian flag have embraced a stealthy approach to keeping the oil flowing: they mislead international trackers by turning off their transponders, rendering the ships impossible to track by anything aside from visual cues.

    Iraq and Kurdistan are nearing a deal that could reopen shuttered oil production from disputed Kirkuk oil fields. After Iraq reclaimed territory from the Kurds in and around Kirkuk a year ago, operations at the fields were interrupted. The U.S. government has been pressing the two sides to resolve their differences.

    Venezuela’s oil production has been in free fall for two years. The country is suffering the worst loss of oil production in history amid an unprecedented economic collapse, years of mis-management and underinvestment in the oil industry. It is forecasted Venezuela’s inflation may surge to one million percent by the end of this year. Venezuela’s oil production plunged by 42,000 bpd from August to average just 1.197 million bpd in September. This compares to an average 2.154 million bpd for 2016 and 1.911 million bpd for 2017.

    U.S. production is among the main reasons for the latest oil price slump. U.S. energy firms added oil rigs for a fourth time in the last five, keeping the rig count at its highest level since March 2015. Drillers added 12 oil rigs in the week to Nov. 9, bringing the total count to 886. The Energy Information Administration (EIA) reported that rising shale production is putting the United States on track to hit the 12 million bpd oil production mark sooner than previously forecast. Next year’s U.S. crude oil output is now expected to average 12.1 million bpd, up from a fore-cast of 11.8 million bpd just a month ago in the October.

    China imported a record volume of oil in October, dispelling fears that the Chinese economy is slowing down. China imported 9.61 million barrels per day in October, up 31.5 percent from a month earlier. However, some of the factors driving imports higher are temporary, such as the need to fill strategic storage, plus a one-off buying by small refiners who had quotas that were nearing expiration.

    Besides, China is changing its sources of crude. The country sharply reduced its intake of U.S. crude, as the trade war between Washington and Beijing escalated this summer. A few months ago, Chinese refiners stopped buying U.S. oil completely in anticipation of tariffs on it. However, in October, refiners resumed purchases of U.S. oil, although the volume of these imports remains unclear. China will still be allowed to import some Iranian crude under a waiver to U.S. sanctions that will enable it to purchase 360,000 bpd for 180 days.

    At the moment global fuel market is being pressured from two sides: a surge in supply from OPEC, Russia and other producers, and increasing concerns about a global economic slow-down. We assume bunker prices may continue downward evolution 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 December 19

16:48 Dredging on IWW of Russia in 2018 fell by 14.6% Y-o-Y to 22.9 million cbm
16:26 NOVATEK signed Memorandum on Strategic Cooperation with SACE
16:03 Non-containerised cargo shows steady increase at Jebel Ali Port
15:42 V.F. Tanker merges into Volga Shipping Company
15:20 Cargo traffic via IWW of Russia forecasted to fall by 3% to 115 million tonnes in 2019
15:16 ESVAGT and Wind Power LAB developed new service concept improving wind turbine inspections
15:03 Royal Caribbean returns to Port of New Orleans
14:33 Maersk announces new rotation on Asia-Europe network
14:08 Concordia Maritime sells positions in chartered-in Suezmax vessels
13:33 SFL enters into lease financing agreement for 3 x 10,600-teu boxships and delivery of Front Falcon
12:58 Maersk joins the Ship Recycling Transparency Initiative
12:55 7 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on December 18-19
12:23 Damen signs with Gerd Stensen for Stan Tug 1606
12:21 Havyard announces its eight windfarm service vessel
11:56 Simulation exercises to improve port security held in Panama
11:31 Port of Newcastle continues modernization of its bulk terminal
11:09 RF Government gives instructions to address the issue on construction of four gas-powered icebreakers
10:50 Regional workshop to address barriers for effective implementation of MARPOL Annex VI held at REMPEC
10:32 Brent Crude futures price down up 0.20% to $56.37, Light Sweet Crude – up 0.04% to $46.64
10:14 THE Alliance unveils enhanced service network for 2019
09:57 Finnish Transport Safety Agency set to contribute to automation of maritime navigation
09:35 FESCO BoD approved new composition of Executive Board
09:16 Baltic Dry Index is down to 1,395 points

2018 December 18

18:21 Uniper SE and MOL enter into agreement on FSRU project in Germany, and one additional LNG transportation agreement
18:00 Throughput of Chinese ports grew by 4.3% to 8.47 billion tonnes in 11M’18
17:46 Rolls-Royce to deliver advanced ship technology to two more expedition cruise vessels for Mystic Cruises
17:43 Aircraft carrier HMS Queen Elizabeth enters LR class
17:27 SOL adds Finnish port of Pietarsaari/Jakobstad to the Zeebrugge route network
17:04 Finnpilot Pilotage BoD decided for no increase in the pilotage fees for 2019
16:42 GTT bags yet another tank design order for LNGC duo
16:38 PRA starts construction of new plastics recycling facility at the Port of Amsterdam
16:25 Arctia and Meritaito join forces to expand their range of services
16:09 Crowley integrates DFTS management into government solutions group to unify supply chain services
15:42 KN enhances its relations with American LNG giants
15:18 BW Group Limited purchased 137,000 shares
14:53 Icebreakers of FSUE Rosmorport assisted 680 ships in navigation season 2018-2019
14:28 Shell Oman and Port of Duqm ink agreement to develop fuel bunkering facilities
14:11 Golar LNG receives LNTP for an FLNG vessel for Greater Tortue / Ahmeyim Project P1, West Africa
13:47 WEG and Praxis sign MoU to support Damen Saab bid for the Brazilian Navy
13:41 Eni gets approval of the investment plan for Merakes Development Project in Indonesia
13:22 Sovcomflot closes USD 264 million long-term revolving credit facility
12:58 Bunker prices are flat at the Far East ports of Russia (graph)
12:40 Antwerp, Belgium will host the 3rd European Environmental Ports Conference on 12-13 June 2019
12:19 Keppel receives limited notice to proceed for GIMI FLNG
11:57 3 icebreaker escort operations performed in eastern part of Gulf of Finland during 24 hours on December 17-18
11:35 Terna’s MONITA HVDC Project: Nexans reaches key milestone with successful completion of submarine power cable
11:10 Container throughput of port Hong Kong (China) down 5.4% to 17.96 million TEUs in Jan-Nov’18
10:46 Bunker sales at the port of Singapore in 11M’18 down 1.8% Y-o-Y to 45.49 million tonnes
10:23 Maersk announces rate increase for Far East to North Europe trade
10:05 Brent Crude futures price down 1.53% to $58.72, Light Sweet Crude – down 1.61% to $49.39
09:47 Austal export opportunity supported by Australian Government financing
09:31 Rosatom drafted Rules for providing navigational and hydrographic support in NSR waters
09:14 Baltic Dry Index is up to 1,406 points

2018 December 17

18:23 Sembcorp Marine retains its position as Asia’s top cruise ship repair and upgrade solutions provider with newbuilds projects delivered in 2018
18:02 USPA announced tenders for dredging in Mariupol and Berdiansk seaports
17:48 SITC holds naming and delivery ceremony for M/V SITC SENDAI
17:37 ONE to implement LSF surcharge in China and Taiwan
17:15 NCSP Group's consolidated cargo turnover for January-October totaled 116,946 thousand tons
16:41 Moody's reaffirms Panama Canal's A2 long-term rating with stable outlook
16:26 Port of Oakland shatters 11-year-old record for November imports