MABUX: Bunker prices set to stabilize at current level
The Bunker Review is contributed by Marine Bunker Exchange
Brent crude oil jumped 3 percent to above $63 a barrel on Thursday, extending a rebound from five-year lows this week, but energy firms start to cut investments in new production.
Brent crude oil this week slumped as low as $58.50 and has almost halved since June as fast-growing U.S. shale output overwhelms demand with losses accelerating after producer group OPEC decided not to cut output at its meeting last month. No doubt that signs are there that prices are threatening future production, where the cost per barrel of oil is higher than the present market price. The oil minister of OPEC’s member Saudi Arabia said on Thursday he believes the drop in prices will be short-lived as demand for crude picks up. - With present low prices for oil, the Saudi Arabia oil minister might have a point but this will hardly happen overnight. It looks like investors favour support around $60 a barrel.
WTI Oil headed for its biggest gain in more than two weeks in New York amid speculation that the price drop to five year low may have been excessive. Future rose as much as 4 percent following an increase of 1 percent on Wednesday. The contract’s 14-day relative strength index is at 26.9, below the 30 level traders view as an indicator prices may be oversold. – “The oil market is way oversold due for a rally”, said Amrita Sen, chief analyst at London-based consultants Energy Aspects Ltd. Looking at scale of price drop, demand growth could surprise significantly to the upside.
President Vladimir Putin gave today his annual press conference in Moscow, and said Russia shouldn’t waste currency reserves protecting the ruble as the country braces for a recession brought on by the collapse of the oil price and sanctions over the Ukraine conflict. “Under the most negative external economic scenario, this situation can last for two years”, Putin said today. “If the situation is very bad, we will have to change our plans, to cut some things”.
For the coming week bunker prices are expected to stabilize around present level.
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)
