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Week 10: Where Bunker Fuel Prices Are Heading

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Updated

Looking ahead

Previously in this series, we discussed that crude tanker stocks gave mixed returns in week 10—the week ending March 9, 2018. VLCC (very large crude carrier) and Aframax rates fell last week. In this part of the series, we’ll see how crude oil and bunker fuel prices fared in week 9.

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Oil prices

In the week ending March 9, oil prices rose especially on the last day of the week. Data showed that the number of US oil rigs fell for the first time in the last seven weeks.

Brent crude oil prices (DBO) closed at $65.58 per barrel on March 9, 2018—up 1.8% from the previous week. WTI (West Texas Intermediate) crude oil prices were up 1.3% week-over-week.

Bunker fuel prices

On March 8, 2018, the average bunker fuel price was $411 per ton—compared to $409.5 per ton on March 1. According to Gibson’s report for week 10, bunker fuel prices at Rotterdam were $347 per ton on March 8—compared to $343 per ton the previous week. Bunker fuel prices at the Port of Fujairah rose to $381 per ton from $378 per ton the previous week, according to the report.

Which companies were impacted?

Industries that transport commodities on ships incur bunker fuel costs. The industries include LNG (liquefied natural gas) carriers, product tankers, dry bulk carriers, and crude oil tankers. Bunker fuel prices closely relate to oil prices.

Crude tanker companies operating their vessels in the spot market incur bunker fuel expenses. Of Tsakos Energy Navigation’s (TNP) 65 vessels, only 16 of them operate in the spot market. Nordic American Tankers (NAT) has most of its fleet in the spot market. Out of 33 vessels, 28 vessels operate in the spot market.

Crude tanker companies record the cost under voyage expenses. In 2017, Euronav’s (EURN) voyage expenses represented 11.5% of its total operating expenses. In 2017, Teekay Tankers’ (TNK) voyage expenses represented 18% of its total operating expenses.

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