Bunker prices to remain volatile next week, expert says
The Bunker Review is contributed by Marine Bunker Exchange
Brent crude oil eased on Thursday after the US Federal Reserve indicated it could end its stimulus program and raise interest rates sooner than expected. Federal Reserve’s Chairman Janet Yellen on Wednesday said the bank would probably end its massive bond buying program this autumn, and could start raising interest rates around six months later beginning of 2015.
While the announcement suggested policymakers are becoming more confident that the world’s largest economy and top oil consumer can stand on its own feet, such a shift would drain the cheap liquidity that has boosted commodities. Fed’s move came as surprise in terms of the timing for increasing interest rates. Both Brent and WTI crude are trading slightly lower on Thursday.
Stocks at Cushing dropped almost 1 million barrels last week, down for a seventh straight week as a TransCanada Corp pipeline continued to drain oil to the Gulf Coast, where stock rose 4.7 million barrels to the highest level yet this year. It seems the stocks are being moved – rather than being consumed on – to the gulf Coast.
Oil prices drew some support from tensions between Ukraine and Russia, the world’s biggest oil producer. The United States warned that Moscow was on a “dark path” to isolation on Wednesday as Russian troops seized two Ukrainian naval bases, including a headquarters in the Crimean port of Sevastopol.
Societe General cut its 2014 price forecast for crude oil on Wednesday, saying prices have underperformed despite strong fundamentals. The bank reduced price targets for Brent to $106 per barrel from $108 and for US crude to $96 per barrel from $99.
Energy is in a boom, but it does not mean the oil prices are booming. There are a number of factors that lead to conclude that, while NYMEX crude is unlikely to collapse, and upward momentum will be hard to come by over the next couple of years. The shale revolution and improving technology in deep water drilling are increasing supply. A drop back to the $80/barrel support for NYMEX crude looks far more likely in the near term than a break through the resistance at $120/barrel.
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)
