In the previous part of this series, we saw how crude tanker rates fared in week eight of 2017. Now, we’ll shift our focus to the cost side of the crude (DBO) tanker industry. Let’s look at how bunker fuel prices performed in week eight.
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Bunker fuel is one of the highest costs for crude tanker companies. It’s closely related to oil prices. Lower crude oil prices translate to lower bunker fuel costs. Lower crude oil prices also encourage countries to import larger quantities of cheap oil to store for future use, increasing crude oil tanker demand.
Bunker fuel prices, the largest cost to run a ship, correlate with crude oil prices. On February 16, 2017, the average bunker fuel price was ~$364 per ton compared to $359 per ton in the previous week.
In terms of major ports, bunker prices at Rotterdam were $311 per ton on February 24, 2017, compared to $303 per ton on February 9, 2017, and $308 per ton in the previous month. At the Port of Fujairah, bunker prices were $336 per ton on February 24 compared to $328 per ton on February 9 and $336 per ton in the previous month.
Lower bunker prices reduce operating costs and boost profits for companies such as Frontline (FRO), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP), Nordic American Tankers (NAT), DHT Holdings (DHT), Gener8 Maritime (GNRT), Navios Maritime Midstream Partners (NAP), and Euronav (EURN).
Bunker fuel prices also affect the costs of product tankers and dry bulk shipping companies such as Navios Maritime Partners (NMM). Liquefied natural gas carrier companies such as GasLog (GLOG) and Golar LNG (GLNG) are also impacted by bunker fuel pricing.