European fuel oil and bunker price evolution

Transcription

1 European fuel oil and bunker price evolution Ned Molloy Managing Editor, Fuel Oil Copyright 216 by S&P Global. All rights reserved. Cover slide example

2 AGENDA LOW OUTRIGHT PRICE IMPACT ON SUPPLY HOW IS FUEL OIL DEMAND RESPONDING? SOME THOUGHTS ON VOLATILITY

3 OUTRIGHT PRICE HIT 14-YEAR LOW FO 3.5%S FOB Rdam Barge $/MT Jan 14 Apr 14 Jul 14 Oct 14 Jan Apr Jul Oct Jan 16 Apr 16 3

4 RUSSIAN FUEL OIL RAIL FEES, Rb/MT 6, 5, 4, 3, 2, 1, Nizhny Novgorod Refinery - Novorossiysk Yaroslavl Refinery - St Petersburg Kirishi Refinery-Vysotsk Ufa Refinery-Vysotsk Omsk Refinery-Vysotsk Nov May 13 Aug 13 Nov May 14 Aug 14 Nov 14 May Aug Nov 16 May 16 4

5 REFINERY FREIGHT NETBACKS GO NEGATIVE Yaroslavl Refinery via St Petersburg Netback $/MT Moscow Refinery via St Petersburg Netback $/MT Kirishi Refinery Via Vysotsk Netback $ Ufa Refinery Via Vysotsk Netback $/MT Omsk Refinery Via Vysotsk Netback $/MT Apr May Jun Jul Aug Sep Oct Nov Dec Jan Mar 16 Apr 16 May

6 Million MT RUSSIAN EXPORTS AND DOMESTIC DELIVERIES Exports Domestic use Mar 216 Source: Russian Energy Ministry, Central Dispatching Unit 6

7 FUEL OIL CRACKS BOUNCE IN JAN/FEB -2-4 FOB Rotterdam barges vs Dated Brent, $/B Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Mar 16 Apr 16 May 16

8 BARGE STRUCTURE REBOUNDS M1 vs M2 FOB Rotterdam barge swaps $/MT -8 May Jul Sep Nov Jan 16 Mar 16 May 16

9 RUSSIAN REFINERY MODERNIZATION CONTINUES Year Refinery Owner Unit(s) 214 Moscow Gazprom Neft Isomerization, Gasoline hydrotreater Khabarovsk Alliance Oil Hydrocracker, Diesel hydrotreater Kirishi Surgutneftegaz Hydrocracker Taneco Tatneft Hydrocracker Tuapse Rosneft CDU Salavat Gazprom CDU 2 Novokuybishev Rosneft Isomerization Kuybishev Rosneft Isomerization Volgograd Lukoil CDU Ufa Bashneft CDU, FCC Salavat Gazprom Isomerization 216 Kuybishev Rosneft Alkylation, FCC, MTBE Komsomolsk Rosneft Hydrocracker Syzran Rosneft FCC, MTBE Angarsk Rosneft Alkylation, FCC, MTBE Ryazan Rosneft Isomerization Volgograd Lukoil CDU Perm Lukoil Coker Nizhny Novgorod Lukoil Isomerization, FCC, Alkylation Salavat Gazprom FCC ULSD +5.3 mil mt Gasoline +.6 mil mt ULSD +.9 mil mt Gasoline +1.2 mil mt Diesel +2.9 mil mt Gasoline +3.2 mil mt

10 RUSSIAN FUEL OIL EXPORTS IN LONG-TERM DECLINE 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Fuel oil exports by key producer, MT Khabarovsk Orsk Refinery Taneco TAIF-NK Bashneft Afipsky Refinery Gazprom Neft Slavneft Surgutneftegaz Lukoil Rosneft March 2 March 216 Source: Russian Energy Ministry, Central Dispatching Unit 1

11 LOW OUTRIGHT PRICE IMPACT ON SUPPLY HOW IS FUEL OIL DEMAND RESPONDING? SOME THOUGHTS ON VOLATILITY

12 FUEL OIL UNDERCUTS LNG ARA Coal $/MMBtu LNG NWE Spot DES $/MMBtu NorthWest Europe FO $/MMBtu Nov May 12 Aug 12 Nov May 13 Aug 13 Nov May 14 Aug 14 Nov 14 May Aug Nov 16 12

13 HI-LO SUBDUED AFTER.1% ECA CHANGE Premium of 1% FOB NWE Cargoes over 3.5% FOB Rotterdam barges, $/mt Oct 13-1 Jan 14 Apr 14 Jul 14 Oct 14 Jan Apr Jul Oct Jan 16 Apr

14 VLCC FIXTURES PER MONTH Jan Mar Apr May 14

15 VLCC FREIGHT CHEAPENING Dirty UKC-Singapore 27kt Lumpsum, $ Mar May Jul Sep Nov Jan 16 Mar 16 May 16

16 FORWARD STRUCTURE PRICING IN OVERSUPPLY May 216 May 217 May 218 May 219 May inter-month spread -4 16

17 Outright price, $/MT FORWARD CURVE PRICING IN LOW SULFUR DEMAND? FOB 3.5% Rdam barge forward curve FOB NW 1% cargo forward curve May 216 May 217 May 218 May 219 May 22 17

18 LOW OUTRIGHT PRICE IMPACT ON SUPPLY HOW IS FUEL OIL DEMAND RESPONDING? SOME THOUGHTS ON VOLATILITY

19 USD/MT Volatility [%] VOLATILITY SUBSIDES Fuel Oil 3.5%S FOB Rotterdam Barge Nov-2 17-Dec Mar May price history volatility (22-days rolling window) 19

20 DELIVERED PREMIUMS DEPEND ON VOLATILITY? FO 3.5%S FOB Rdam Barge 38 CST Delivered premium 1 5 Jun 14 Sep 14 Dec 14 Mar Jun Sep Dec Mar 16 2

21 THANK YOU Ned Molloy Managing Editor, Fuel Oil +44 ()