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Crude Tanker Stocks and ETFs: The Current Outlook

PART:
1 2 3 4 5 6 7 8
Part 8
Crude Tanker Stocks and ETFs: The Current Outlook PART 8 OF 8

How Bunker Fuel Prices Are Faring as Oil Prices Hit a 2-Year High

Oil prices

Oil prices are back in bull market territory. Brent crude oil traded at $59 per barrel on September 25—its highest level in two years. Crude oil prices are more than 30% up since June 2017 as stockpiles have tightened and demand in industrial countries and emerging countries has expanded. Analysts believe the crude oil market is rebalancing. WTI crude oil traded at $52.2 per barrel on September 25.

How Bunker Fuel Prices Are Faring as Oil Prices Hit a 2-Year High

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Oil demand and tanker rates

Lower oil prices encourage countries to import larger quantities of cheap oil to store for future use, which raises crude oil tanker demand and has a positive impact on tanker rates.

Oil prices also directly impact cost-side bunker fuel prices. Lower bunker fuel prices benefit the crude oil tanker industry and vice versa, including Nordic American Tankers (NAT), Teekay Tankers (TNK), Frontline (FRO), DHT Holdings (DHT), and Euronav (EURN).

Bunker fuel prices rise

On September 22, the average bunker fuel price was ~$381 per ton—13.5% higher than average bunker fuel prices of $336 per ton on June 1.

Regarding major ports, bunker prices at Rotterdam were $324 per ton on September 22, compared to $288 per ton on June 1.

At the Port of Fujairah, bunker prices were $338 per ton on September 22, compared to $307 per ton on June 1, according to a Gibson report.

Oil price estimates

The EIA estimates that US crude oil prices will average $48.83 per barrel in 2017 and $49.58 per barrel in 2018. A Wall Street Journal survey estimates that US crude oil prices could average $51 per barrel in 2018.

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