The Bunker Review is contributed by Marine Bunker Exchange
Brent premium to WTI widens as U.S. supplies continues to gain. U.S. oil supplies have risen more than 50 million barrels in seven weeks, keeping domestic crude from advancing as much as international prices.
West Texas Intermediate (WTI) has climbed 5.1 percent this month versus a 16 percent jump in Brent, widening the European benchmark’s premium to more than $10 a barrel from $4.75 on January 30th. Supply disruptions in Libya have helped to boost Brent, while U.S. increased crude inventories and production climbed to records last week.
On Thursday GMT 15:35 the Brent was at $60.95 a barrel down -0.65 and WTI was at $49.65 a barrel down -1.34 a barrel. With oversupply of crude oil the oil prices ought to be much lower but the oil producing countries and OPEC in particular are doing their very best to talk market upwards by insisting on an increase in demand, which might be there but very marginal. – The optimists are trying to push prices up and the market realism will press the oil prices downward again. How long will this go on? The winter is almost over and we are heading for spring, which means demand will even be less, but with low oil prices the world economy will eventually take off and demand will follow. Reaching the $80 per barrel in early summer could probably be a fair and realistic estimate.
The U.S. stockpiles of crude increased 8.43 million to 434.1 million barrels last week, the Energy Information Administration said Wednesday. That’s the most in government weekly data starting in 1982 and up 51.7 million barrels since January 2. The weekly production stood at 9.29 million barrels a day, the most in estimates going back to 1983.
The surge in supply illustrates how improvements in horizontal drilling and hydraulic fracturing technology may prop up production even as companies cut spending and idle rigs. The funDamental are still very week for WTI. Production is still rising in the U.S. There is a conflict between production and demand. Certainly production is exceeding demand, at least in the U.S.
In Libya Sarir and Mesla oil fields were restarted on February 22 after being damaged by fire, were halted again on Tuesday. The country produced 300 000 barrels a day of crude last month, down from 450 000 in December as fighting disrupted operations at oil fields and terminals.
For the coming week we expect the bunker price to continue its volatility – one day up and next day down.
* 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)