Ok, that would be a very difficult, but a “provable” hypothesis, as the fact is bunker prices are down and we did have the much anticipated Facebook IPO this week.
On a more serious note it was a very busy week in the oil markets. Continued sovereign debt problems in Europe is translating to worries about the world economy and rightfully so. The Seaway Pipeline reversal coming to fruition is converging Brent and WTI, while bringing down prices. Greece’s debt rating was brought from BB- down to CCC.
Put all this together and it creates another 3% decline in the KPI Bride Oil Composite. Over the past two weeks we are looking at a serious price differential in bunker prices. Since the March 1 high this year we are down almost 10%. While this is not creating profits for ship owners and charterers it is a much needed reprieve to what has been oppressive prices. All indications are that this trend is not going to change near term, but there are looming threats to it that could very easily bring us back to higher levels. The bunker buyer should be exercising cautious patience meaning; waiting to purchase, but always watching the market for sudden moves and knowing the avails situation for any particular port.
The KPI Bridge Oil Composite is a calculated fuel number based on 14 ports strategically positioned worldwide. It is calculated on a weekly basis blending 90% fuel oil prices with 10% distillate prices. The idea behind the number is that it would represent actual fuel costs on a global basis and what vessels would consume on average. This number will not fluctuate as quickly as daily prices and can easily be hedged or used for voyage calculations.