Bunker prices movement depends on Iran nuclear talks outcome
The Bunker Review is contributed by Marine Bunker Exchange www.mabux.com
On Wednesday West Texas Intermediate (WTI) advanced the most in two months in New York after government report showed that U.S. crude output dropped from the highest level in more than three decades. Production dropped 36 000 barrels a day to a new lower total of 9.39 million barrels per day. That’s down from 9.42 million from March 20, the highest daily production since January 1983.
Driller cut the number of rigs seeking oil in the U.S. last week to the fewest since March 2011. There is no doubt the pace of U.S. production is going to slow down.
WTI increased on Wednesday to $2.49, or 5.2 percent, to close at $50.09 a barrel on the New York Mercantile Exchange (NYMEX) and Brent settlement climbed $1.99, or 3.6 percent, to end the session at $57.10 a barrel on the London based Intercontinental Exchange (ICE). Brent closed at a $7.01 premium to WTI.
The shale oil production will continue to drop because of the decrease in drilling activity. These shale wells have steep decline rates and the drilling rate isn’t high enough to maintain the high output.
Negotiations on Tehran’s disputed nuclear programme have stretched well beyond a self-imposed March 31 deadline, with diplomats saying the chances of a preliminary accord in the next few hours are finely balanced. Tehran is hoping for a deal that will end crippling economic sanctions and allow it to sell millions of barrels of oil, some of it stored at sea in supertankers and ready for delivery. Due to the optimism in Lausanne oil price dropped more than 3 percent on Thursday as officials from the big global powers stayed locked in nuclear talks with Iran that, if successful, could allow the Islamic state to release more crude oil onto an already oversupplied market. Investors seem to have taken a view that there will be a deal and the market will be even more oversupplied than it already is and the price drop is likely to accelerate further down.
Oil prices were on Thursday at GMT 14.30 – Brent $55.57 down $1.53 a barrel and WTI $48.95 down $1.14 a barrel.
For next week if an agreement can be reached between Iran and the big western nations plus Russia and China, bunker prices are most likely to drop, if not the volatile market will continue.
* MGO LS
All prices stated in USD / Mton
All time high Brent = $147.50 (July 11, 2008)
All time high Light crude (WTI) = $147.27 (July 11, 2008)