Bunker prices to continue on mixed trend next week
The Bunker Review is contributed by Marine Bunker Exchange
Brent crude oil shot up nearly 6 percent on Thursday after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen, although importers saw little immediate threat to supplies. The strike against Houthi rebels, who have driven the president from Yemen’s capital Sanaa, could stoke concerns about the security of Middle East oil shipments.
Oil prices jumped as traders and importers said they were worried the Saudi attack was a sign that fighting in the oil rich Middle East was out of control and spreading.
Brent futures had risen more than $3 a barrel to as high as $59.78 a barrel just before 0800 GMT, up almost 6 percent since their last settlement and the WTI was also up more than $3 at $52.35 a barrel.
Geopolitical events are often short-lived and it is expected to be so this time as well. Thursday afternoon the Brent crude oil at 1340 GMT had bounced back to $57.82 and the WTI to $50.58.
With the global crude glut build up from U.S. shale oil and strong output from producers such as Russia, there is little immediate worry about any shortage developing.
The huge oversupply persists, but as soon as the market players see a reason to push market one way or the other they will act in such a way that the volatility will be bigger than needed, in order make more money. Speculators make money on the price volatility and no money on a stable market. But all categories of players are needed otherwise the Oil Future market cannot survive.
Today the world is flooded with cheap oil and plunging profits. One obscure corner of the energy business is moving forward: the owners of storage tanks. – Companies like Vopak NV, Kinder Morgan Inc. and Oiltanking GmbH are among those benefiting from rising demand for onshore tanks and higher prices to rent limited space.
Tank space will be the next threat to the oil prices. When the market runs out of tank space, which is just a few months away the oversupply must then enter the already flooded oil market and the situation will get worse and oil prices will drop further. Will this happen? Probably not! By then guess that the oil producing countries have agreed on a reduced production schedule.
For the next week prices volatiliy is expected to continue.
* 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)