Week 28: Bunker Fuel Prices Fell despite a Rise in Oil Prices
In the previous part of this series, we saw that the fixture tally for Suezmax and VLCC vessels fell in week 28. The rates also fell last week. In this part, we’ll focus on bunker fuel prices.
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Crude oil prices
Brent crude oil prices rose to $48.91 per barrel on July 14, 2017, from $46.71 per barrel on June 30, 2017. Prices rose due to the IEA’s forecast that global oil demand will accelerate this year. In the monthly report, the IEA raised the oil demand growth estimate to 1.4 million barrels per day from 1.3 million barrels. The market weighed in the likelihood of an oil production cap on Libya and Nigeria. OPEC invited both of the countries to the upcoming meeting to discuss the stability of their production.
Bunker fuel prices
On July 13, 2017, the average bunker fuel prices were $323 per ton—compared to $333 per ton a week ago on July 6, 2017. Despite a rise in oil prices, bunker fuel prices fell due to weak demand. According to the Gibson report for week 28, bunker fuel prices at Rotterdam were $279 per ton on July 17, 2017—down from $285 per ton the previous week. Similarly, bunker fuel prices at the Port of Fujairah fell to $296 per ton on July 13 from $303 per ton on July 6, according to the same report.
Which companies are affected?
For all of the shipping companies—product tankers, LNG (liquefied natural gas) carriers, crude tankers, and dry bulk carriers—bunker fuel is one of the most significant costs. Bunker fuel costs are closely related to oil prices (DBO). A rise in oil prices translates to a rise in bunker fuel prices. Some of the major crude oil tanker companies are Frontline (FRO), DHT Holdings (DHT), Nordic American Tankers (NAT), and Euronav (EURN). Navios Maritime Partners (NMM) is a major dry bulk shipper. Golar LNG (GLNG), GasLog (GLOG), and Teekay LNG Partners (TGP) are LNG carrier companies.