17 February 2021
Last week oil prices had their longest period of sustained gains (9-days in a row) in nearly two years as crude prices sustained levels north of $60 a barrel for the first time since last January. That rise in crude has obviously coincided with significant bunker price movement, which came of no surprise to ClearLynx as we previously estimated VLSFO prices would touch $500+ in January in our end of year recap from December.
When looking at Brent crude, it closed at $51.09 /bbl on Jan4 2021 and by Feb12 2021 closed at $62.43 /bbl, a 22% increase. When compared to the same period from 2020, Brent went from $67.05 /bbl on Jan2 2020, and by Feb12 2020 had fallen to $55.54, oddly enough a 22% decrease. So, while not quite at the $67 /bbl levels from last January, the rate of recovery so far in 2021 has matched the rate of decline from when COVID first started to impact fuel demand.
To show just how much prices have moved this year, ClearLynx took the time to break our market report prices into buckets, taking prices from Feb12 close and comparing them with prices from 3 months ago, Nov12.
When looking at the HSFO prices, back in November nearly 50% of all HSFO prices on CL were priced between $200-$300, compared to February 12th when there were 0 HSFO ports sub $300. Nearly 90% of HSFO prices are now between $351-500+, versus just 7% back in November.
LSFO prices from back in November now more resemble current day HSFO levels, as in November LSFO prices ranging $351-$400 accounted for 68% of all LSFO ports on CL and currently HSFO ports priced between $351-$400 account for 58% of all HSFO ports on CL. Perhaps the most notable jump though is that back in November, only 1% of LSFO ports were priced north of $500, and as of February 12th, 58% of all LSFO ports were priced north of $500.
LSMGO prices north of $500 back in November only accounted for 15% of all CL priced ports, with that number rising to 96% of ports priced higher than $500 as of February 12 and over 20% of ports are north of $600.
With such a significant rise in prices one has to consider the impact this will have on not only the bunker budget, but the ability to secure credit lines. ClearLynx created this example based on an owner lifting 500,000 MT over the course of a year (70/30 LSFO/LSMGO split). Using the AVG $/MT for each quarter of 2020, the projected spend would have been $183 million USD. When using that same tonnage and split but looking at prices for 2021 so far, the projected budget is already at $227 million USD, a 24% increase in spend, and that is just based on Jan & Feb prices, so that number should only continue to rise as the year continues.
With all of that said, ClearLynx wanted to see the grade distribution from January 2020 and how it compared to January 2021’s split, as with prices on the rise, scrubber economics may become more of a factor in 2021.
The above results show that overall, there has been a 10% increase in HSFO lifts from January 2020 to January 2021, while LSMGO & VLSFO lifts decreased by 4% each and “others” fell 2% as well. An indication that spreads may be widening between HSFO/LSFO and shrinking between LSFO/LSMGO. To help visualize this further ClearLynx looked at some of its top ports AVG $/MT from November and then compared that to 2021 so far and the shrinking in spread between LSFO/LSMGO and widening between HSFO/LSFO is evident.
ClearLynx will continue to monitor price and crude movement as 2021 continues. If there are any ports or regions of particular interest to you and your company please do not hesitate to contact ClearLynx through the CONTACT US button below for more information.VIEW ALL MARKET INSIGHT ARTICLES
Through our bunker procurement, pricing and analytics platform, we have unique visibility of actual and indicative pricing, product requirements, availability and completed transactions across the market. By aggregating this anonymized data, coupled with over a decade of historical data, we can provide insight into market activity, current trends and commentary on potential future outcomes.
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