Bunker prices remain mixed, expected to head downward
The Bunker Review is contributed by Marine Bunker Exchange
Brent crude oil fell towards $101 a barrel on Thursday, just above a 14-month low, on ample fuel supplies and Chinese economic data indicating slowing demand. The world’s top two crude oil benchmarks have fallen by more than $10 a barrel since June on a build-up of supply in the Atlantic Basin and diminished worries over the risk that conflicts in the Middle East would hit oil production.
Global economic growth also appears to be faltering, fuelling concerns a market surplus could last for some time. Libya has resumed exports from its largest port, helping push the country’s oil output to its highest for months, while the top exporter Saudi Arabia raised its output in July to 10 million barrels per day, both adding to the over-supply of crude.
Brent crude’s front contract October was down 107 cents at $101.21 a barrel. The U.S WTI crude slipped to its lowest since January at $92.50 a barrel, down 95 cents. There is no shortage of oil. Investors are more concerned about weak demand at a time when the supply outlook remains generally comfortable, despite world political worries. Fighting in Iraq has had only a very limited impact on producing and transporting facilities. At the same time, lagging European demand and the seasonal lull in Asia continue to weigh on sentiment.
A survey of China’s factory activity showed that growth in the sector slowed to a three-month low in August, adding to concerns about economic softness that could depress oil use in the world’s second-largest oil consumer, which is generally negative for commodities.
The drop in Brent towards $100 has sparked talk that OPEC could consider cutting output, although delegates from the producer group have said higher seasonal demand in coming weeks was expected to support the market. Assume price would have to be lower over a sustained period before OPEC would cut output. The general feeling is that Brent will hit $100 a barrel mark and somewhat lower for a period due to the present weak demand.
For the coming week bunker prices will likely remain mixed with a tendency to drop further.
All prices stated in USD / MT
All time high Brent = $147.50 (July 11, 2008)
All time high Light crude (WTI) = $147.27 (July 11, 2008)
