Jeff has nearly 40 years of bunker buying experience in marine fuels, working as both a bunker broker and bunker trader. He first joined the relatively new bunker buying section ay Davies and Newman Shipping Company in 1973, after which he joined the fledgling company Bunkerfuels UK in 1984.
In 2001, Bunkerfuels Group was incorporated into the leading global bunker company World Fuel Services, whose other main company at that time was Trans-Tec Services. Both companies amalgamated some time later. Jeff remained here until his retirement in 2012, latterly working exclusively as an in-house bunker buyer for the diverse portfolio of various world-wide bunkering companies World Fuel Services owns.
What's going on in the oil markets ... prices are in free-fall?
Many shipping companies being able to buy fuel without having to inflict ever more price increases on their customers.
The United States has been fanatic for self-sufficiency for a long time, it detests being reliant on foreign oil producers and all the risks and difficulties that comes with that, especially buying from some unstable regions. So a huge push comes in the shape of shale oil. From the earliest "nodding donkeys" pushing up a few barrels an hour to the current rich shale oils and producers increasing efficiency in getting it out. The dream of self-sufficiency may still be a dream, but current US shale oil production is at a 30-year-high and increasing year-on-year.
When I started in the business over 40-years ago, OPEC were a force to be reckoned with, every whim was jumped upon – every sneeze diagnosed.. they even managed to close Dutch motorways ! But this was yesterday. Today they are still essentially a cartel of competing oil producers meeting every now and then to set quota output and set target prices (which is essentially price fixing) for the benefit of their members.
But they seemed to have been keeping their heads down for some time now.. reaping the financial benefits whilst the prices continued to climb skyhigh. This group still supplies around 40% of the total world oil demand but that leaves 60% for others and the 'others' are increasing production. No country wants to be so reliant on outside oil.
OPEC member countries each have their own individual financial and political difficulties and they need all the oil dollars they can get their hands on. So they continue pumping like normal. They are unlikely to multilaterally or even unilaterally agree to meaningfully reduce any output to try and support an upturn in the oil prices in the sort term. They also need to keep their market share and even increase production to try and maintain the amount of dollars in the falling price scenario.
Some pundits say world oil demand is slowing but what exactly does that mean? Does that mean that next year's total world oil demand will be lower than this year? It doesn't – it means that demand will in fact be higher but it won't be AS high as some oil analysts had predicted... and with the increasing oil production, more and more oil will hit the market.
The fat cats of the oil industry have had it so good for a long time making so many oil dollars, but some oil companies now seem to be at a loss as what to do next by these falling prices.... some even seemed not to have planned for such a scenario.
Interestingly a few oil companies have stated in the past that they need some 'volatility' to make money as the oil prices have been too smooth and stable to make any meaningful profit. So here is that volatility.
So for now... my advice for bunker buyers would be to buy as little and often as you need.... as prices continue to fall...