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Bunker Fuel Prices Rose in Week 38

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Crude oil prices 

Brent crude oil prices ranged from $45.9–$47.7 per barrel in week 38—the week ending on September 23, 2016. This was lower than the previous week’s prices of $45.8–$48.3 per barrel. Now, prices are 4% lower than the same period in 2015.

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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 the crude oil tanker demand. It has a positive impact on tanker rates. Higher freight rates benefit the crude oil tanker industry.

Bunker fuel prices

Bunker fuel prices, the largest cost of running a ship, correlate with crude oil prices. For the week ending September 23, 2016, the average bunker fuel price was $297–$305 per ton. Bunker fuel prices are 5% higher than the same period in 2015. Prices were $296–$303 per ton in the previous week.

In terms of major ports, bunker prices at Rotterdam were $242–$250 per ton—compared to $241–$247 per ton the previous week. At the Port of Fujairah, bunker prices were $261–$269 per ton—compared to $257–$267 per ton the previous week.

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 costs for product tankers and dry bulk shipping companies such as Navios Maritime Partners (NMM). Liquefied natural gas carrier companies such as GasLog (GLOG) and Golar LNG (GLNG) are also impacted by bunker fuel pricing.

Investors who are interested in broader exposure to the industrials sector can consider the SPDR Dow Jones Industrial Average ETF (DIA).

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