The Bunker Review was contributed by Marine Bunker Exchange
Oil rally stalls on talk of OPEC+ boosting output
Oil prices halted their rally on Monday, with both benchmarks down nearly 1 percent, after Russia’s finance minister said Russia and OPEC may decide to boost production to fight for market share with the United States, where output remains at record highs.
Losses were limited by a tightening of global supplies, as output has fallen in Iran and Venezuela amid signs the United States will further toughen sanctions on those two OPEC producers, and on the threat that renewed fighting could wipe out crude production in Libya.
Brent crude futures ended the session at $71.18 a barrel, down 37 cents, or 0.5 percent, having earlier slid below $71. Brent hit its highest since Nov. 12 on Friday at $71.87.
U.S. West Texas Intermediate crude futures fell 49 cents, or 0.8 percent, to settle at $63.40 per barrel.
Oil prices have been lifted by more than 30 percent this year, mainly due to a deal by the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, to curb by 1.2 million barrels per day from Jan. 1 for six months. The group will meet in June to decide whether to continue withholding supply.
Russian Finance Minister Anton Siluanov said over the weekend that Russia and OPEC may decide to boost production to fight for market share with the United States, but this would push oil as low as $40 per barrel.
“There is a dilemma. What should we do with OPEC: should we lose the market, which is being occupied by the Americans, or quit the deal?” Siluanov, speaking in Washington, said, TASS reported.
“(If the deal is abandoned) the oil prices will go down, then the new investments will shrink, American output will be lower, because the production cost for shale oil is higher than for traditional output.”
Today's morning start
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Oil prices extend losses as oversupply worries drag
Oil prices edged down on Tuesday after a Russian minister said the nation and OPEC may boost crude output to fight the United States for market share, checking a recent rally driven by tighter global production.
“There is a growing concern that Russia will not agree on extending production cuts and we could see them officially abandon it in the coming months,” said Edward Moya, senior market analyst, OANDA.
The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, will meet in June to decide whether to continue withholding supply. That comes after they previously agreed to crimp output by 1.2 million barrels per day (bpd) from Jan. 1 for six months.
Ballooning shale oil output in the United States has also helped rein in benchmark crude prices.
“Rising U.S. shale output has ... imposed headwinds for oil prices,” said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.
However, losses in oil prices were checked by tighter supplies from Iran and Venezuela amid signs the United States will further toughen sanctions on those two OPEC producers, and on the threat that renewed fighting could wipe out crude production in Libya.
Oil Future close 15th April:
Brent: $71.18(-0.37)pbr
WTI: $63.4(-0.49)pbr
MGO: $629.75(-3.25)/mton
NY Harbor Ulsd: $634.5(-2.99)/mton
Oil Futures trading at GMT: 06.17; Brent:-26 cents, WTI:-10 cents
Present tendency downward.
Expect bunker prices to drop 3 usd/mton for all Fuel Oil as well as for MGO and NY Harbor Ulsd. All price estimations are from Oil Future close last night.
Forecast for tomorrow is showing a slight downward trend.