Expert predicts little change in bunker fuel prices for the coming week
The Bunker Review is contributed by Marine Bunker Exchange
Oil and bunker steadies as stronger demand balances the overproduction. The U.S. crude oil (WTI) prices just above $60 a barrel on Thursday as strong demand for oil products helped balance a global overhang of oil for immediate delivery.
North Sea Brent crude oil little price change as investors eyed a very weak physical crude market in the Atlantic basin despite reports of stronger demand for gasoline and diesel in the United States and Europe.
Official prices for Nigerian crude have hit their lowest in at least a decade with as much as 10 million barrels of unsold light, sweet crude oil capping Atlantic basin prices.
But demand for oil products is fairly strong. U.S. gasoline demand in the week to June 19 hit the highest seasonal level since 1991, according to the U.S. Energy Information Administration (EIA).
Front month Brent (August contract) was down 24 cents to $63.23 a barrel and WTI down 42 cents to $59.85 both at GMT 13:29 on Thursday.
Reports of unsold physical cargoes in the North Sea combined with a Brent crude oil in contango that shows no signs of tightening. Instead this is a warning that the market is currently not tightening up into the high demand season as one should expect.
The U.S. inventory report on Wednesday said, gasoline stocks climbed 680,000 barrels to 218.49 million in the week to June 19. A Reuter’s poll had indicated a 304,000 barrel drop. Meanwhile U.S. crude stocks declined for the eighth straight week, by 4.9 million barrels to 462.99 million, in the week ending June 19, compared with analyst expectation of a 2.1 million barrel draw. For the moment there is no clear direction where the market is heading. The Greece financial problem is a very disturbing factor and it is difficult to judge how the market will react once we have the final verdict.
The Swiss Bank UBS raised its average 2015 Brent crude price forecast on Thursday to $61.50 per barrel from $56.25 per barrel earlier, while it increased its average 2015 U.S. crude price (WTI) outlook to $56 a barrel, up from $51. – At present with the vast overproduction of 1.5 – 2.5 million barrels a day, oil prices should go down. The storage capacity for the overproduction might soon be a problem. – UBS also gave a forecast for 2016 saying average price of $70 for Brent and WTI $67.50.
OPEC announced that its share of the global market last year declined to the lowest level since 2003, underscoring the motive for the group’s push to defend sales volume. The market share went down 41.8 percent in 2014, from 43.3 percent the previous year. The erosion of OPEC’s dominance by surging North American shale oil prompted the group to abandon its decades-long role of balancing world markets in November. – U.S. shale oil is now the swing producer.
The outlook for next week is again very much the same as last week. What will happen to Greece? Bunker prices are expected to show slight changes for the coming week.
* 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)