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Bunker prices plunge below $200 to seven-year low

Global bunker fuel prices have plummeted to a seven-year low following bearish crude oil prices, with benchmark Singapore 380 cst fuel grade assessed at $168.50 per metric tonne (pmt) on Monday.

The last time that Singapore 380 cst bunker price dipped below $200 pmt was on 31 December 2008 when it was indicated at $198 pmt, according to data obtained by Seatrade Maritime News.

With oil prices continuing on a downward trend falling below $40 per barrel, marine fuel prices have been tracking the decline, decreasing steadily from $225.50 pmt on 26 November to $195.50 pmt on 8 December before slipping to $168.50 pmt yesterday, according to data from Ship & Bunker.

Compared to the year ago price of $342.50 pmt on 22 December 2014, yesterday’s price indication has plunged by 50.8% in the space of 12 months.

Elsewhere, three other major global bunkering ports have also recorded prices at below $200 pmt. Europe’s Rotterdam port saw its 380 cst grade priced at $142.50 pmt on Monday, while America’s Houston and Middle East’s Fujairah recorded $141.50 pmt and $164.50 pmt respectively.

With bunker prices at a low for this year, Singapore-based bunker traders have seen fairly active enquiries for the past two weeks. “Most buyers are trying to fix early before the holidays,” a bunker trader told Seatrade Maritime News.

Traders also observed that term buyers are believing that the bottom could be near and those that were waiting have started coming forward to confirm purchases, also partly due to the upcoming holidays.

Lower fuel prices that help to reduce operating costs are a boost to shipowners amid the sluggish shipping market marked by oversupply of tonnage and low freight rates.

Investment bank Goldman Sachs has predicted an oil price of $20 per barrel based on 32m barrels per day of production from OPEC in 2016. And based on the current relationship between Brent and bunker prices, Ship & Bunker data suggests that the prices of 380 cst in primary ports could easily fall under $100 pmt.

Looking further ahead, Societe Generale believes that the drop in stockpile growth due to higher demand in the second half of 2016 will result in Brent crude climbing to $60 per barrel by the fourth quarter of next year.

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