Expert says bunker prices to swing around $5 or $10 PMT next week
The Bunker Review is contributed by Marine Bunker Exchange
WTI and the Brent dropped on Thursday from a one week high and Brent crude oil fell below $87 a barrel, pressured by a stronger dollar after the Federal Reserve painted a brighter outlook for the U.S. economy. The U.S. central bank on Wednesday ended its monthly bond purchase program, showing confidence in the prospects for the U.S. economy. The expectation is an increase for demand from the world’s top oil user and now also a significant oil producer. The dollar is gaining as expectations rise that the Federal Reserve, could lift interest rates soon. – A stronger greenback makes dollar priced commodities such as oil more expensive for buyers using other currencies.
Some analysts are surprised the oil price has not fallen further on Thursday, given the strength of the dollar. All commodities are under pressure and a further drop in oil and bunker prices are expected. The better outlook for the U.S. economy, however, was helping to limit losses in oil prices.
Crude has collapsed into a bear market amid increasing global supplies as leading members of the OPEC resisted calls to cut production. Futures are down about 10 percent in October, set for the largest monthly loss since May 2012. Supply and demand will return to equilibrium and OPEC members aren’t waging a price war, the group’s Secretary General Abdalla El-Badri said yesterday.
OPEC, which pumps about 40 percent of the world’s oil, doesn’t face a “critical situation" as a result of the price slump, according to El-Badri. Its collective output in 2015 will remain close to this year’s level of about 30 million barrels a day, he said at the Oil & Money conference in London. OPEC seems to be relaxed over the downturn in oil prices, since no members have demanded any emergency meeting. With a production cost of 16-20 USD/barrel for most of the OPEC members, against the shale oil and oil sand production cost ranging between 70-90 USD/barrel, they have little fear.
For the coming week we expect bunker prices to swing around five or ten USD/MT.
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)
