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Thursday, September 03, 2009

Forward Curve in Fuel Offers Relief to Shipowners: Chart of Day

Thursday, 03 September 2009

Shipowners may see relief from rising bunker costs, their biggest fixed expense, as prices for the fuel are leveling off after months of increases, E.A. Gibson Shipbrokers Ltd. said. The CHART OF THE DAY shows the cost of bunker fuel in the benchmark Rotterdam market, tanker rates and an index of shipowners’ stock prices. The forward curve for bunkers is flat out through February 2010, indicating shippers’ fuel costs may stabilize.
“Although the forward price curve is not a forecast, the level at which participants are currently prepared to trade fuel oil is very flat and close to today’s price through the next 6 months,” the broker said in an Aug. 28 report. “If this is the case, then the volatility in bunker prices may be removed.”
The Bloomberg Tanker Index, which includes shipowners including Tsakos Energy Navigation Ltd, General Maritime Corp. and Teekay Corp., is down 20 percent this year. The price for 380-centistoke bunkers in Rotterdam has more than doubled so far this year from $174 to $429 per metric ton, according to data compiled by Bloomberg.
Crude-oil shipping rates have fallen 60 percent this year as global energy demand was cut by recession, and the Organization of Petroleum Exporting Countries cut its member nations’ production quotas 16 percent since September 2008 to 24.85 million barrels a day.
“We’re seeing revenues under a lot of pressure and our biggest cost is fuel,” Peter Bell, a senior vice president at tanker owner General Maritime Corp., said in a telephone interview, speaking generally about the industry. “It keeps going up and up.”

Source: Bloomberg