The Bunker Review is contributed by Marine Bunker Exchange
West Texas Intermediate (WTI) traded near the lowest in more than two weeks as crude inventories increased to the highest level in 83 years in the U.S. The crude inventories have risen to the most since May 1931, according to monthly government data going back to 1920. Stockpiles at Cushing, Oklahoma, the delivery point for the WTI contract, dropped by 788 000 barrels to 26 million. That’s the lowest level since 2009. Supplies at the storage hub, the largest in the U.S. have decreased since January when the southern leg of the Keystone XL pipeline began moving oil to the Gulf of Mexico. Instead the crude inventories along the Gulf of Mexico coast climbed to 209.6 million barrels, the highest in EIA data going back to 1990.
Brent futures rose on Thursday as Russia vowed to respond if its interests in Ukraine came under attack, stoking fears of an escalation in tensions that have pushed the oil benchmark up 5 percent this month to hover above $109 a barrel. Russia accused the U.S. of being behind the political upheaval in Ukraine, now in its fourth month, which has dragged Moscow’s relations with the West to their lowest since the Cold War. But price gains were capped as oil stockpiles in the United States rose to a record reported on Wednesday.
The immediate demand-supply dynamic is negative, but Ukraine is the wildcard that is stopping the market from declining further. For the near term markets are largely neutral but further escalation could lead to damaging economic sanctions, and raises the risk of a disruption to the Russian gas supplies on which Europe depends. The region affected is no key to global supplies but it is bad enough, since investors are worried a sudden turn in events for the worse could rattle markets.
But gain of supply in the U.S. and increased shipment from the Middle East such as Iraq and Iran are capping the price from further increase for the time being.
We expect oil market to be in a waiting mood next week.
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)