Crude oil prices
Brent crude oil prices ranged from $42.8 per barrel to $44.2 per barrel in the week ending April 15, 2016. Prices rose from the previous week. However, they were nearly 35% lower than in the same period last year. Crude oil (DBO) prices impact crude oil demand. This impacts freight rates and bunker fuel prices.
Oil demand and tanker rates
Lower crude oil prices encourage countries to import larger quantities of cheap oil to store for future use. This increases crude tanker demand. It boosts tanker rates. Higher freight rates benefit the crude tanker industry.
Bunker fuel prices
Bunker fuel prices are the biggest cost to run a ship. It correlates with crude oil prices. For the week ending April 15, 2016, the average bunker fuel price ranged from $233 per ton to $248 per ton. Bunker fuel prices were almost 30% lower than the prices in the same period last year. Bunker fuel prices ranged from $224 to $233 in the previous week.
Bunker prices at Rotterdam were $165–$177 per ton—higher than the previous week’s range of $147–$157 per ton.
At the Port of Fujairah, bunker prices were $185–$193 per ton—higher than the previous week’s range of $166–$180 per ton.
Lower bunker prices reduce operating costs and increase 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 cost side of product tankers and dry bulk shipping companies like Navios Maritime Partners (NMM). Liquefied natural gas carrier companies such as Teekay LNG Partners (TGP) and Höegh LNG Partners (HMLP) are also impacted by bunker fuel pricing.
Investors who are interested in broader exposure to the industrials sector can invest in the SPDR Dow Jones Industrial Average ETF (DIA)