Improving World Economy Boosts Ship Fuel Demand in Asia

According to researchers, the improving global economy is providing a steady boost to Asian trade and creating a rise in demand for bunker or marine fuel.

After declining for five years straight, the demand for marine fuel is expected to rise in Asia this year (2014), by as much as two percent. However, ample supply of the most common ship fuel might incur no improvement in returns for the fuel companies. According to three oil and gas research firms: Consultancy Wood Mackenzie, Energy Security Analysis, and HIS Energy, the improving global economy is boosting the Asian trade, leading to an increase in bunker or marine fuel consumption. Ample supplies from the Middle East and Europe is expected to maintain a balance between the demand and supply of oil in the market.

According to Consultancy Wood Mackenzie, the Asian bunker fuel demand is about 1.42 million barrels per day (bpd) for 2014, which is expected to rise to 1.45 million bpd in 2015. It is important to note that the figures have improved in comparison with the demand in 2013, when the bpd was 1.39 million. Energy Security Analysis, as well as HIS Energy, also agreed with Woodmac, projecting an improved Asian bunker market. According to them though, the bunker fuel demand will remain around 1.34 million bpd to 1.35 million bpd in 2014-15.

Analysts have already forecasted a 3.7 per cent growth of the global economy for 2014 which has improved by 0.5 per cent from 2013 with United States and some of the Europeans powers covering up for the slowing Chinese growth. The increasing demand for bunker fuel may not boost the fuel oil cracks, a measurement of the return on processing crude into the heavy residue fuel oil, like 380-centistoke used in shipping. At the moment, fuel oil accounts for almost all Asian bunker requirements. In fact, as much as 75 per cent of the total Singapore marine sales is comprised by 380-cst.