The Bunker Review is contributed by Marine Bunker Exchange
Brent futures dipped below $111 a barrel on Thursday as supply fears eased after Libya declared an end to an oil crisis that has cut exports from the OPEC member to a trickle. Libya’s acting Prime Minister Abdullah al-Thinni said the government had reached a deal with a rebel leaders controlling oil ports Es Sider and Ras Lanuf facilities after reaching an agreement on Wednesday. The ports in the country’s east have been blockaded in the past year. Libya could now add 500 000 barrels a day on an already well supplied market.
Brent crude extended previous losses to fall to a three-week low, dropping 58 cents to $110.66 a barrel by 1045 GMT. US oil declined 47 cents to $104.01 also sliding to a three-week low. Even if Libya production comes back, it will still be only 40-50 percent of the country’s full capacity before the crisis.
Oil investors are worried over how the crisis in Iraq can be brought under control.With limited global spare production to fill up any major disruption in shipments from OPEC’s second-largest producer, prices will head higher later this month. Iraqi Prime Minister Nuri al-Maliki said he hoped parliament could form a new government in its next session after the first collapsed in discord. Baghdad cannot afford any long delays since large areas have already fallen under the control of al Qaeda splinter group.
Problems in Iraq came at the worst possible time for oil as the global economy is picking up momentum and demand has increased and spare capacity continues to shrink. The demand from the US and China, the world’s top two oil consumer is growing.
US crude stocks fell more than expected last week as refineries hiked output ahead of the holiday July 4 weekend, data from the Energy Information Administration showed. Crude stocks dropped 3.2 million barrels compared with expectations for a decrease of 2.2 million barrels. Gasoline stocks fell 1.2 million barrels versus forecast of a 400 000 barrels gain. Employment growth in the US is expected to have continued in June. Earlier this week, data from China showed factory activity hit multi-month highs in June, reinforcing signs that the world’s second largest economy is steadying. A serious short fall in the global crude supply could send oil prices well above our previous All-Time-High $147.50 a barrel from July 2008.
For the coming week oil prices are expected to decline.
All prices stated in USD / MT
All time high Brent = $147.50 (July 11, 2008)
All time high Light crude (WTI) = $147.27 (July 11, 2008)