Expert predicts bunker prices to decline further
The Bunker Review is contributed by Marine Bunker Exchange
Brent crude oil extended losses on Thursday below $79 a barrel, continuing holding price level around four year low. OPEC remains still unwilling to reduce output to ease a supply glut. WTI in New York is dropping slightly less and is trading just above $76 a barrel. The spread between Brent and WTI is around $2.80. Futures have now slid to the lowest level since September 2010. Saudi Arabia is committed to a stable market and speculation of a price war within the Organization of Petroleum Exporting Countries has no basis in reality, Oil Minister Ali Al-Naimi said yesterday in Acapulco, Mexico. Crude stockpiles in the U.S., the world’s biggest oil consumer, probably rose for a sixth week, a Bloomberg News survey indicated before government data being released on Thursday.
Oil has collapsed into bear market as leading OPEC members resisted calls to cut production and instead reduced export prices to the U.S., where output has climbed to the highest level in more than three decades. Venezuela, Libya and Ecuador have asked for action to prevent crude from falling further. The group is scheduled to meet this month 27th in Vienna. To curb the overproduction of crude oil OPEC would probably need to cut production by 1 -1.5 million barrels per day, in comparison with the U.S. shale oil production, which is continuing to surprise to the upside. Demand for oil from members of the Organization of the Petroleum Exporting Countries (OPEC) will drop to 29.2 million barrels per day next year, almost 1 million barrels less than current output, the cartel said this week.
China’s economy lost momentum in October, with factory growth dipping and investment growth hitting a near 13-year low, reinforcing expectations of a slower increase in fuel demand from emerging nations. Developing economies have been a major support for oil over the past decade, but demand is now failing to keep up with increasing supply from North American shale production.
For the coming week we expect bunker prices can continue bearish trend if OPEC’s attitude remains.
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)
