In the previous part of this series, we saw that the rates for all three tankers—VLCC (very large crude carrier), Suezmax, and Aframax—rose in week 16.
Now, let’s shift our focus to the cost side of the crude oil (DBO) tanker industry. Let’s see how bunker fuel prices performed in week 16, which ended on April 21, 2017.
Overall, bunker fuel prices fell due to lower crude oil prices.
Bunker fuel is one of the highest costs for crude oil tanker companies. It’s closely related to oil prices. Lower crude oil prices translate to lower bunker fuel costs.
Lower crude oil prices also encourage countries to import larger quantities of cheap oil to store for future use, which increases crude oil tanker demand.
Bunker fuel prices rise
On April 20, 2017, the average bunker fuel price was ~$343 per ton—compared to $358 per ton in the previous week.
In terms of major ports, bunker prices at Rotterdam were $291 per ton on April 20, 2017—compared to $305 per ton on April 13, 2017, and $270 per ton in the previous month, according to Gibson’s weekly report. At the Port of Fujairah, bunker prices were $313 per ton on April 20—compared to $321 per ton on April 13 and $293 per ton in the previous month, according to the same report.
Lower bunker prices reduce operating costs and boost 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 product tankers and dry bulk shipping companies’ costs such as Navios Maritime Partners (NMM). Liquefied natural gas carrier companies such as GasLog (GLOG) and Golar (GLNG) are also impacted by bunker fuel pricing.