MABUX: Bunker prices to remain volatile, may end the week lower
The Bunker Review is contributed to IAA PortNews by Marine Bunker Exchange
Oil prices have during Thursday morning until the declaration from the ECB in the afternoon been volatile. Now on Thursday 15:00 hrs CET, we know the result. ECB will buy public securities, bonds, for 60 billion monthly until end of September 2016. This method is meant to create a sustained adjustment of the rate of inflation around plus 2%. The same method has been used in the U.S. where it worked out very well and also in UK where result was quite satisfactory and in Japan where the result has been meagre.
Will this “quantitative easing”, as it is called, affect the bunker prices? We don’t think there is anything that ECB has announced today, is really going to alter the supply-and-demand dynamics with respect of oil prices. Today Thursday before the ECB announcement the oil price volatility was noticeable and after the news the market continued to be varied. We expect the market will be quite end of the day and close on zero, i.e., very little price change.
Will this, so called QE policy, which is basically printing money to buy sovereign bonds, have any long term affect? More money available on the market for investments could long term affect oil prices upward. Right now the market is consolidating before trying to determine, which will be the next directional trend.
In order to increase the oil price, the Secretary-General Abdalla El-Badri, said in an interview with Bloomberg Television, that producers outside the OPEC organization should be the first to reduce their output, since they caused the surplus of oil that pushed crude below $50 a barrel.
However the market believe a price recovery is likely in the second half of 2015, said the Chief Economist Fatih Birol from the International Energy Agency (IEA) in Davos on Thursday.
Bunker prices are expected to remain volatile at the beginning of the next week but towards the end of the week prices may edge lower again.
* 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)