The Bunker Review is contributed to IAA PortNews by Marine Bunker Exchange
Brent crude oil is heading for $66 a barrel on Thursday, gaining terrain for a second day, supported by the belief that the global supply glut is starting to ease. The U.S. government’s supply report on Wednesday showed crude inventories declined for a third week. Stockpiles had been at record levels due to excess supply, raising concern that storage capacity was getting tight.
Due to the geopolitical situation in Iraq, the city of Ramadi fell to Islamic State on Sunday in the most significant setback for Iraqi security forces in nearly a year. Successful attacks from the Islamic State (ISIS) raise concern about the stability of oil flows from Iraq, OPEC’S second largest producer, but the Islamic State insurgency has yet to affect its exports to world markets.
Brent crude oil has rallied sharply $115 in June 2014 due to a supply glut, in decline that deepened after the Organization of the Petroleum Exporting Countries dropped its long-standing policy of cutting output to support prices. Front-month Brent crude futures have seesawed in recent weeks as concerns about a tightening oil market on the one hand and ongoing oversupply on the other take turns in dominating sentiment. The market has largely held to a $4 price range of $64-68 barrel since April 23. – OPEC meets on June 5 and is expected to maintain its focus on defending market share.
Analysts said on Thursday that price volatility was likely to continue, but general oversupply would prevent big price gains.
Part of the problem in gauging the extent of oversupply in global oil markets is that market watchers are struggling to reliably count barrels that are currently being traded and stocked, with some estimates showing over 100 million barrels that are unaccounted for in international statistics. – Despite this, the consensus seems to be that the global market has been oversupplied by between 1.5 million and 2.5 million barrels per day since the start of the year.
For next week expect bunker prices to continue its volatility – one day up and one 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)