The Bunker Review is contributed by Marine Bunker Exchange
West Texas Intermediate declined for a third day after US crude inventories increased while tension in Ukraine continued to ease. The crude has been falling since Monday as the geo-political risk is decreasing. Ukraine risk premium has disappeared for now as we are seeing a dialog between Russia and West.
Brent crude oil steadied around $108 a barrel on Thursday as the West and Russia engaged in high-stakes diplomacy to cool the crisis in Ukraine. The North Sea benchmark has fallen $4 since peaking on Monday, when investors grew concerned over the crisis between Ukraine and Russia. European leaders meeting in Brussels on Thursday were set to warn but not sanction Russia, whose forces have seized control of Ukraine’s Crimea region. The foreign ministers of Russia and the United States are due to meet again on Thursday in Rome.
Crimea's parliament voted to join Russia on Thursday and its Moscow-backed government set a referendum within 10 days on the decision in a dramatic escalation of the crisis over the Ukrainian Black Sea peninsula.
The sudden acceleration of moves to bring Crimea, which has an ethnic Russian majority and has effectively been seized by Russian forces, formally under Moscow's rule came as European Union leaders gathered for an emergency summit to seek ways to pressure Russia to back down and accept mediation.
The market has collectively come to the conclusion that an armed conflict in Ukraine is not on the cards, and the speculative positions been sold off and the Ukraine price premium is back to where we began. Oil was also pressured further by a larger than expected rise in US crude stocks and data showing private employers in the United States added fewer workers than forecast in February.
For the next week expect oil prices to follow the development in Ukraine. Right now the market is in a waiting mood.
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)