Why Bunker Fuel and Crude Oil Prices Rose in Week 36
In the previous part of this series, we saw that average VLCC (very large crude carrier) rates rose from multiyear lows. Also, the Suezmax rates rose in week 36. However, Aframax rates fell in the week ending September 8, 2017. In this part, we’ll discuss how crude oil prices and bunker fuel prices fared in week 36.
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Crude oil prices
Crude oil (DBO) prices rose in week 36 especially due to a larger-than-expected fall in US crude oil production. According to the U.S. Energy Information Administration, crude oil production fell by 0.7 MMbpd (million barrels per day) to 8 MMbpd. The WTI crude oil price was $54.49 per barrel on September 7—up from $52.38 on August 31, 2017. Similarly, Brent crude oil prices rose to $49.09 per barrel on September 7 from $47.23 per barrel on August 31.
Bunker fuel prices
On September 7, 2017, the average bunker fuel price was $371 per ton—compared to $348 on August 31, 2017. According to the Gibson report for week 36, bunker fuel prices at Rotterdam were $317 per ton on September 7, 2017—up from $297 per ton the previous week. Bunker fuel prices at the Port of Fujairah rose to $335 per ton on September 7 from $315 per ton on August 31, according to the same report.
Which companies were impacted?
LNG (liquefied natural gas) carriers, product tankers, dry bulk carriers, and crude tankers all transport their products on ships. For all of these shipping companies, bunker fuel is one of the most important costs. Bunker fuel prices are closely related to oil prices. Any rise in oil prices translates to a rise in bunker fuel prices.
Some of the major crude oil tanker companies include DHT Holdings (DHT), Nordic American Tankers (NAT), Teekay Tankers (TNK), Gener8 Maritime Partners (GNRT), and Euronav (EURN). Navios Maritime Partners (NMM) is a major dry bulk shipper, while Golar LNG (GLNG) and Teekay LNG Partners (TGP) are LNG carrier companies.