World fuel indexes has not had any firm trend during the week. The oil markets continue to balance, and the concerns over global economic growth are not as important as the demand trajectory.
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs) continued insignificant downward evolutions in the period of July 07 – July 14:
380 HSFO – down from 238.14 to 231,64 USD/MT (-6,50)
180 HSFO – down from 283.43 to 279.14 USD/MT (-4,29)
MGO – down from 483.21 to 469.86 USD/MT (-13,35)
OPEC forecasts higher demand for its crude next year as the global surplus fades, while Saudi Arabia pumped near-record levels amid peak summer consumption. The Organization will need to produce about 33 million barrels a day next year (142,000 a day more than June output – 32.858 million a day). As per cartel, global oil demand will increase by 1.2 million barrels a day next year to reach an average of 95.3 million a day, with almost all of the growth concentrated in emerging economies such as India and China.
The EIA in turn increased its U.S. crude output forecast for 2017 to 8.2 million bar-rels a day from 8.19 million projected in June. Production in 2016 will be 8.61 million barrels a day, up from 8.6 million in last month’s report.
Meantime, the oil rig count in the U.S. jumped once again on last week, rising by 10 to 351. The prospect of new drilling is causing some concern in the markets about a return of supply.
Global fuel market reacted rather nervously after an international arbitration court ruled against Beijing’s claims across large swathes of the South China Sea. The ruling will be seen as a victory by other regional claimants such the Philippines and Vietnam. The deep waters of the South China Basin between the Spratly and also-disputed Paracel Islands are the most direct shipping lane between northeast Asia’s industrial hubs of China, Japan and South Korea and Europe and the Middle East. Besides, control over the area means an access to offshore oil and gas deposits and perhaps fishing grounds. There are still concerns that China may simply ignore the ruling, and it will not change in any way the reality on the ground.
U.S. crude supplies fell 2.55 million barrels to 521.8 million last week. Crude stock-piles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, decreased by 232,000 barrels to 63.9 million, the lowest levels since January. Inventories remain at the highest seasonal level in at least a decade.
Canadian oil-sands producers are restoring production after wildfires and finding that U.S. refiners made commitments to import crude by sea from alternative suppliers when the northern Alberta wildfire was out of control and the duration of disruption to supplies was unclear. Canadian rising output combined with reduced U.S. demand render additional pressure on fuel prices.
Iran exports about 2 million barrels of its daily output of 3.8 million and plans to pump 4 million barrels a day by year-end and reach 4.8 million within five years. The country is seeking more than $100 billion in investment from international partners to upgrade its oil industry and reclaim its position as the second-biggest producer in OPEC. The U.S. still prohibits transactions related to Iran from being conducted in dollars, accusing the Islamic Republic of abusing human rights and sponsoring terrorism.
The interruptions in Iraqi crude loadings at Basra this week threatened to tighten supplies. Although loadings reportedly resumed, Iraq still plans to cut crude oil ex-ports from its southern ports to 2.79 million barrels per day (bpd) in August from 2.99 million bpd planned for July.
Libya’s government of national unity is working to reopen four of the OPEC country’s big-gest oil ports after securing a deal to unify the fractured nation’s state energy company. Four ports (Es Sider, Zawiya, Ras Lanuf and Zueitina) accounting for about 860,000 barrels a day in crude-exporting capacity have been shut due to political turmoil and fighting. The country currently pumps about 350,000 barrels a day of crude and exports 220,000 to 250,000 barrels a day. It is expected that crude exports from Es Sider and Ras Lanuf will resume within a week. The shipments will be made under the authority of the unity government.
Attacks on oil facilities cut Nigeria’s monthly output to about 1.4 million barrels a day in May, the lowest in 27 years. A lull in the violence helped companies make repairs and boost production of crude and condensate to 1.9 million barrels a day as of July 8. However, attacks on Chevron Corp. and Eni SpA facilities in the past week have put the recovery in doubt again.
In summary, we do not expect any drastic changes on world bunker market next week. Bunker prices will continue to follow fuel market’s irregular fluctuations caused by moment drivers.
* 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)
Source: Marine Bunker ExchangePrevious Next
In Conversation With Mr Ajay Reshamwala, Managing Director, Reshamwala Shipbrokers
India Tanker Shipping Trade Summit 2018