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European fuel oil and bunker price evolution
Cover slide example
Ned Molloy
Managing Editor, Fuel Oil
Copyright © 2016 by S&P Global.
All rights reserved.
Platts
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Platts
• LOW OUTRIGHT PRICE – IMPACT ON SUPPLY
• HOW IS FUEL OIL DEMAND RESPONDING?
• SOME THOUGHTS ON VOLATILITY
AGENDA
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OUTRIGHT PRICE HIT 14-YEAR LOW
3
0
100
200
300
400
500
600
700
Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16
FO 3.5%S FOB Rdam Barge
Platts
$/MT
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RUSSIAN FUEL OIL RAIL FEES, Rb/MT
4
0
1,000
2,000
3,000
4,000
5,000
6,000
Nov12
Feb13
May13
Aug13
Nov13
Feb14
May14
Aug14
Nov14
Feb15
May15
Aug15
Nov15
Feb16
May16
Nizhny Novgorod Refinery -Novorossiysk
Yaroslavl Refinery - StPetersburg
Kirishi Refinery-Vysotsk
Ufa Refinery-Vysotsk
Omsk Refinery-Vysotsk
Platts
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REFINERY FREIGHT NETBACKS GO NEGATIVE
5
-100
-50
0
50
100
150
200
250
300
Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16
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
Platts
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RUSSIAN EXPORTS AND DOMESTIC DELIVERIES
6
Platts
Source: Russian Energy Ministry, Central Dispatching Unit
0
1
2
3
4
5
6
Mill
ion
MT
Feb 2015 Feb 2016 Mar 2016
Exports
Domestic use
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FUEL OIL CRACKS BOUNCE IN JAN/FEB
Platts
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
Jan15
Feb15
Mar15
Apr15
May15
Jun15
Jul 15 Aug15
Sep15
Oct15
Nov15
Dec15
Jan16
Feb16
Mar16
Apr16
May16
FOB Rotterdam barges vs Dated Brent, $/B
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BARGE STRUCTURE REBOUNDS
Platts
-8
-7
-6
-5
-4
-3
-2
-1
0
May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16
M1 vs M2 FOB Rotterdambarge swaps
$/MT
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RUSSIAN REFINERY MODERNIZATION CONTINUES
Platts
Year Refinery Owner Unit(s)
2014 Moscow Gazprom Neft Isomerization, Gasoline hydrotreater
Khabarovsk Alliance Oil Hydrocracker, Diesel hydrotreater
Kirishi Surgutneftegaz Hydrocracker
Taneco Tatneft Hydrocracker
Tuapse Rosneft CDU
Salavat Gazprom CDU
2015 Novokuybishev Rosneft Isomerization
Kuybishev Rosneft Isomerization
Volgograd Lukoil CDU
Ufa Bashneft CDU, FCC
Salavat Gazprom Isomerization
2016 Kuybishev Rosneft Alkylation, FCC, MTBE
Komsomolsk Rosneft Hydrocracker
Syzran Rosneft FCC, MTBE
Angarsk Rosneft Alkylation, FCC, MTBE
Ryazan Rosneft Isomerization
Volgograd Lukoil CDU
Perm Lukoil Coker
Nizhny Novgorod Lukoil Isomerization, FCC, Alkylation
Salavat Gazprom FCC
ULSD
+5.3 mil mt
Gasoline
+0.6 mil mt
ULSD
+0.9 mil mt
Gasoline
+1.2 mil mt
Diesel
+2.9 mil mt
Gasoline
+3.2 mil mt
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RUSSIAN FUEL OIL EXPORTS IN LONG-TERM DECLINE
10
Platts
Source: Russian Energy Ministry, Central Dispatching Unit
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
March 2015 March 2016
Fuel oil exports by key producer, MT
Khabarovsk
Orsk Refinery
Taneco
TAIF-NK
Bashneft
Afipsky Refinery
Gazprom Neft
Slavneft
Surgutneftegaz
Lukoil
Rosneft
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Platts
• LOW OUTRIGHT PRICE – IMPACT ON SUPPLY
• HOW IS FUEL OIL DEMAND RESPONDING?
• SOME THOUGHTS ON VOLATILITY
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FUEL OIL UNDERCUTS LNG
12
Platts
0
2
4
6
8
10
12
14
16
18
20
Nov11
Feb12
May12
Aug12
Nov12
Feb13
May13
Aug13
Nov13
Feb14
May14
Aug14
Nov14
Feb15
May15
Aug15
Nov15
Feb16
ARA Coal$/MMBtu
LNG NWE SpotDES $/MMBtu
NorthWestEurope FO$/MMBtu
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HI-LO SUBDUED AFTER 0.1% ECA CHANGE
13
-20
-10
0
10
20
30
40
50
60
70
80
Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16
Premium of 1% FOB NWE Cargoes over 3.5% FOB Rotterdam barges, $/mt
Platts
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VLCC FIXTURES PER MONTH
14
0
1
2
3
4
5
6
Jan Feb Mar Apr May
VLCCs
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VLCC FREIGHT CHEAPENING
15
Platts
3
4
5
6
7
Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16
Dirty UKC-Singapore 270kt Lumpsum, $
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FORWARD STRUCTURE PRICING IN OVERSUPPLY
16
Platts
-4
-3.5
-3
-2.5
-2
-1.5
-1
-0.5
0
May 2016 May 2017 May 2018 May 2019 May 2020
inter-month spread
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FORWARD CURVE PRICING IN LOW SULFUR DEMAND?
17
Platts
150
170
190
210
230
250
270
290
310
May 2016 May 2017 May 2018 May 2019 May 2020
Ou
trig
ht
pri
ce, $
/MT
FOB 3.5% Rdam bargeforward curve
FOB NW 1% cargo forwardcurve
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Platts
• LOW OUTRIGHT PRICE – IMPACT ON SUPPLY
• HOW IS FUEL OIL DEMAND RESPONDING?
• SOME THOUGHTS ON VOLATILITY
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VOLATILITY SUBSIDES
19
0
10
20
30
40
50
60
70
80
90
100
0
50
100
150
200
250
02-Nov-2015 17-Dec-2015 03-Feb-2016 21-Mar-2016 05-May-2016
Vo
lati
lity
[%]
USD
/MT
Fuel Oil 3.5%S FOB Rotterdam Barge
price history volatility (22-days rolling window)
Platts
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DELIVERED PREMIUMS DEPEND ON VOLATILITY?
20
Platts
0
5
10
15
20
25
30
0
100
200
300
400
500
600
700
Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16
FO 3.5%S FOBRdam Barge
380 CSTDeliveredpremium
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THANK YOU
Ned Molloy
Managing Editor, Fuel Oil
+44 (0)207 176 6684
21
Platts