Will Japan increase oil reserves?

Oil prices went up today. They are saying it's become militants attacked an oil pipeline in Nigeria.

I wonder if it's not because countries are now starting to stockpile oil.

China is increasing their oil reserves from 1 months supply to 3.

Now Japan is following suit.

This from Lloyd's List

JAPAN has struck a deal with an oil company in the United Arab Emirates that would see more crude oil transported to the Far East to fill an onshore reserve base.

And in May 2009, MoneyNews.com reported

Japan's business daily Nihon Keizai reported that Japan may increase its national oil reserves to the equivalent of about four months' worth of domestic consumption, or a 40 percent increase over current levels.

Government officials denied the Nikkei report.

Overall, the price should be going down. Demand is going down according to

June 29 (Bloomberg) -- The International Energy Agency, an adviser to oil-consuming nations, cut five-year forecasts for global crude demand because of the economic slump, predicting consumption won’t regain last year’s levels until 2012.

click here for article from Bloomberg

So, bunker fuel prices should be coming down too. Once all the countries are finished increasing their oil reserve stocks.

At least the good thing about this for the tanker operators is this has increased the demand for tankers. But that will be short lived.

What price for bunker fuel?

Oil has been going up.

Personally, I think there is way too much speculation going on which is driving up the price of oil. Hedge funds and others are now buying up oil, putting them in tanker ships, and (in my opinion) manipulating the market to drive up the price.

This of course, is just my opinion.

One of my friends is investing in an oil exploration venture. I have a chance to invest, but as I think the price or oil is now artificially high, I won't be investing.

OPEC says they won't be increasing production until oil hits 100.00 a barrel.

I am guessing there will be a lot of volatility in the market in the next few months.

TSA calculates bunker costs

The TSA (Transpacific Stabilization Agreement) web-site now details the basis they will use for calculating bunker surcharges, or bunker adjustment factors (BAF).
(UPDATE - I just realized they are calling this a bunker fuel charge. Next thing you know they will implement a ship cost charge.)

Personally, I think this exercise is mainly for the carriers to understand what they should be charging, more than for the customers.

Steamship lines have been making so much money the last few years, probably no one has been worried about their "cost accounting" guidelines. They have been more worried about finding space for all the cargo coming their way, and of course, with that whole supply/demand thing working, the rates just kept going up.

When the bottom fell out of the market, whoever set the prices just did their best, probably without having the tools to really know their costs.

In my experience, liner carriers aren't very good about cost accounting. Of course, it is very difficult because it depends so much on utilization of each sailing.
It's the same problem for the airlines. Difference is, people can be enticed by really cheap rates. Cargo isn't.

Cargo volume doesn't improve when you drop the rates. Carriers cannot (generally) drop the rates so low as to close the deal between buyer and seller.

The TSA did their whole calculation based on bunker oil around 740.00 per metric ton. Today the price is around 260.00 per metric ton.

They might have shot themselves in the foot.