The Bunker Review was contributed by Marine Bunker Exchange
Oil surged on Tuesday amid OPEC caution to offset Iran sanctions
Oil prices hit their highest in about six months on Tuesday as sources said Gulf OPEC members were ready to raise output only if there was demand before offsetting any shortfall following a U.S. decision to end waivers for buyers of Iranian crude.
The United States on Monday demanded buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
U.S. President Donald Trump said he was confident that Saudi Arabia and the United Arab Emirates will fulfill their pledges to make up the difference in oil markets, a U.S. official told reporters Monday.
“The Saudis aren’t rushing to fill what could be a substantial supply gap in the market,” said John Kilduff, a partner at Again Capital Management LLC. “The market has gotten tight globally over the course of the last several months, primarily because of the efforts of Saudi Arabia.”
U.S. crude futures settled up 75 cents, or 1.1 percent, at $66.30 a barrel, after hitting an intraday high of $66.60, the highest since Oct. 31.
Brent crude rose 47 cents, or 0.6 percent, to $74.51 a barrel. The global benchmark earlier touched $74.73, a level not seen since Nov. 1.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among OPEC at around 3 million barrels per day (bpd), but April exports have shrunk to below 1 million bpd, according to tanker data and industry sources.
Market today Wednesday
Oil dips on well supplied markets despite tighter Iran sanctions
Oil prices inched lower on Wednesday on signs that global markets remain adequately supplied despite a jump to 2019 highs this week on Washington’s push for tighter sanctions against Iran.
Brent crude futures were at $74.24 per barrel at 0058 GMT, down 27 cents, or 0.4 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $66.02 per barrel, down 28 cents, or 0.4 percent, from their previous settlement.
Crude futures rose to 2019 highs earlier in the week after the United States said on Monday it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action from Washington.
With Iranian oil exports likely declining sharply from May as most countries bow to U.S. pressure, global crude markets are expected to tighten in the short-run, Goldman Sachs and Barclays bank said this week.
Despite this, analysts said global oil markets remained adequately supplied thanks to ample spare capacity from the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), Russian and also the United States.
The International Energy Agency (IEA), a watchdog for oil consuming countries, said in a statement on Tuesday that markets are “adequately supplied” and that “global spare production capacity remains at comfortable levels.”
The biggest source of new oil supply comes from the United States, where crude oil production has already risen by more than 2 million barrels per day (bpd) since early 2018 to a record of more than 12 million bpd early this year, making America the world’s biggest oil producer ahead of Russia and Saudi Arabia.
“Total oil supplies from the United States are expected to grow by 1.6 million bpd this year,” the IEA said.
Commercial inventories in the United States are also high.
With Iranian oil exports likely declining sharply from May as most countries bow to U.S. pressure, global crude markets are expected to tighten in the short-run, Goldman Sachs and Barclays bank said this week.
Despite this, analysts said global oil markets remained adequately supplied thanks to ample spare capacity from the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), Russian and also the United States.
The International Energy Agency (IEA), a watchdog for oil consuming countries, said in a statement on Tuesday that markets are “adequately supplied” and that “global spare production capacity remains at comfortable levels.”
The biggest source of new oil supply comes from the United States, where crude oil production has already risen by more than 2 million barrels per day (bpd) since early 2018 to a record of more than 12 million bpd early this year, making America the world’s biggest oil producer ahead of Russia and Saudi Arabia.
Oil Future close 23rd April:
Brent: $74.51(+0.47)pbr
WTI: $66.3(+0.75)pbr
MGO: $648.25(-0.50)/mton
NY Harbor Ulsd: $652.05(+4.31)/mton
Oil Futures trading at GMT: 04.25; Brent: -40 cents, WTI: -38 cents
The General trend is downward, but will it hold throughout the day? The rebound is probably not that strong.
Expect bunker prices for Fuel Oil increase 3-4 usd/mton. MGO unchanged and
NY Harbor Ulsd up 3-4 usd/mton.