Bunker prices to continue downward trend next week, expert says
The Bunker Review is contributed by Marine Bunker Exchange
Crude oil futures tumbled to their lowest in nearly seven years on Monday after OPEC failed to address a growing supply glut, while a stronger dollar made it more expensive to hold crude positions. Brent and WTI crude futures fell as much as 5 percent after the policy meeting on Friday which ended without an agreement to lower production.
For the first time in decades, OPEC oil ministers dropped any reference to the group’s output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted.
Oil prices fell for a fourth day in a row on Wednesday after the market ignored an unexpected drawdown in U.S. crude stockpiles to focus on a build in distillates, including diesel, that came in twice as large than expected.
Brent crude closed on Wednesday down 15 cents at $40.11 a barrel, after hitting a near seven-year low at $39.57. The benchmark has lost $3.73, or 8.5 percent, since Thursday, after an OPEC meeting on Friday virtually abandoned price support measures for oil. The U.S. West Texas Intermediate (WTI) crude finished the session down 35 cents at $37.16.
On Wednesday Energy Information Administration (EIA) reported a drop of 3.6 million barrels last week cited by the EIA. But the EIA also released bearish data showing inventories of distillates soared 5 million barrels, double what had been forecast and the sharpest rise since January.
Much of the draw may be the result of tax related inventory positioning by Texas and Louisiana refiners. Therefor the draw does not represent either a drop in production or an increase in demand.
PIRA Energy, a New York based global oil consultancy, said it expected crude prices to be under further pressure as onshore oil storage was likely to run out by the first quarter.
Brent crude prices will continue to struggle due to a large global commercial oil stock surplus, which PIRA estimates will total 500 million barrels above normal levels by end 2015.
OPEC raised crude output to the highest in more than three years as it pressed on with a strategy to protect market share and pressure competing producers.
For the coming week we expect bunker prices to edge downward.
* 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)