Bunker Fuel Prices Rose in Week 14
In the previous part of this series, we saw how the West African VLCC (very large crude carrier) market fixture tally reached a record high, while Suezmax and Aframax rates dropped in week 14. Now let’s shift our focus to the cost side of the crude oil (DBO) tanker industry. Let’s see how bunker fuel prices performed in week 14, which ended April 7, 2017.
Interested in DBO? Don't miss the next report.
Receive e-mail alerts for new research on DBO
Overall, the bunker fuel prices head higher in week 14. According to the Transoil report, activity was healthy in most bunker hubs as owners rushed to fix their bunker requirements in light of rising crude oil prices.
Bunker fuel is one of the highest costs for crude oil 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, which increases the crude oil tanker demand.
Bunker fuel prices rise
On April 6, 2017, the average bunker fuel price was ~$347 per ton compared to $332 per ton in the previous week.
In terms of major ports, bunker prices at Rotterdam were $295 per ton on April 6, 2017, compared to $282 per ton on March 30, 2017, and $305 per ton in the previous month, according to Gibson’s weekly report. At the Port of Fujairah, bunker prices were $313 per ton on April 7 compared to $300 per ton on March 30 and $328 per ton in the previous month, according to the same report.
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 impact 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 (GLNG) are also impacted by bunker fuel pricing.