The Bunker Review is contributed by Marine Bunker Exchange
Brent and West Texas Intermediate traded near the lowest price since July 2009 as Saudi Arabia questioned the need to cut output because OPEC’s biggest producer will defend market share. Brent and WTI futures dropped around 4 percent on Wednesday but today Thursday, there is a slight rebound. Brent increased $0.50 to $64.74 and WTI $0.30 to $61.24 at CET 13.57.
Oil has collapsed into a bear market as OPEC’s three largest members offered the deepest discounts on exports to Asia in at least six years. The group, which supplies about 40 percent of the world’s crude, decided against reducing its output quota at a meeting last month even as the U.S. pumps at the fastest pace in more than three decades.
OPEC said on Wednesday demand for its crude in 2015 would fall to its lowest in more than a decade, indicating a large supply surplus in 2015 without OPEC output cuts or a slowdown in the U.S. shale boom. The prospect of any OPEC cut remained slim as Ali al-Naimi, the Saudi oil minister, on Wednesday meant that the group will stick to its decsision outlined at the OPEC meeting November 27th, despite a $13 drop in prices since then.
At the meeting, Saudi Arabia and its Gulf allies urged fellow OPEC members to combat the growth in U.S. shale oil production, which needs relatively high prices to be economical and has been eroding OPEC’s market share, by resisting output curbs. Any break in OPEC solidarity or price war will lead to an enormous price-dive shock that would push oil to $40 or $50 a barrel, Mohammad Sadegh Memarian, an Iranian Oil Ministry official, said at a conference in Dubai December 9.
Crude will stay at about $65 a barrel for at least half a year until OPEC changes its production or economic growth revives, Nizar Al-Adsani, chief executive officer of state-run Kuwait Petroleum Corp. Said December 8.
For the coming week we expect bunker prices to flatten out or edge slightly further down.
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)