The Bunker Review is contributed by Marine Bunker Exchange
Oil prices rose on Thursday morning after data showed that U.S. crude inventories dropped and refinery demand was high. U.S. crude inventories fell 4.3 million barrels last week, according Energy Information Administration (EIA), as refineries boosted throughput to a record level.
Front-month U.S. crude futures WTI were trading on Thursday at $51.66 (+0.25) and Front-month Brent futures were trading at $57.74 (+0.69) at GMT 12:28. However note that U.S. and Brent prices are down over 17 and 13 percent respectively from their June peaks as oversupply of around 2.5 million barrels per day remains unsold. The traders have already discounted the return of Iranian oil into the market from 2016 following the nuclear deal between Tehran and the six global powers.
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC) has some of the world’s biggest oil reserves. It exported almost 3 million barrels per day (bpd) before Western sanctions over its alleged ambitions to build a nuclear bomb saw shipments collapse to about a million bpd over the last 2 ½ years. Iran has around 20 million barrels of oil in storage, but most of it is not for export. Before market can see any Iranian oil on the international market experts predict it could take until the end of 2017 to increase production by as much as 600 000 bpd.
Beyond Iran’s impact on oil prices, the country offers big investment opportunities as it needs to modernize its sanction-hit oil sector. Potential investment in Iran is huge; having left three quarters of its combined oil and gas reserves – the third largest in the world – are yet to be produced.
Oil price and bunker prices will continue to stay low. There is no sign in the near future that oil price or bunker prices for that matter, will increase form present level. The odd rebounds are likely to happen but the general trend is down and it will last for a long time.
A constant oversupply, underdemand and geopolitical events will create a bearish market, which will continue to push bunker prices downwards.
Bunker price outlook for the coming week is downward in general terms but with the occasional rebounds, but short lived.
* 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)