Bunker prices to continue to slide next week
The Bunker Review is contributed by Marine Bunker Exchange
Brent and West Texas Intermediate (WTI) crudes fell to the lowest in more than four years hitting the low on Thursday $75.48 for the Brent and $71.89 per barrel for the WTI.
Venezuela will propose an output cut that’s backed by Ecuador, said Rafael Ramirez, the nation’s OPEC representative. Persian Gulf group members have reached a consensus on production, according to Saudi Arabia’s Oil Minister Ali Al-Naimi. The Oranization of Petroleum Exporting Countries will take a “unified position,” he said on Wednesday.
Crude collapsed into a bear market last month amid the highest U.S. output in three decades and signs of slowing global demand growth. The U.S. production climbed by 73 000 barrels to 9.08 million a day, the highest in weekly records that started in January 1983. The overproduction of crude oil is estimated to be around 2 million barrels per day at present. The question is now, will the 12 members of OPEC decide to cut the production during their Vienna meeting, which began today Thursday the 27th of November.
OPEC has no real reason to do anything because their production cost per barrel is only $16 -20. Meanwhile the producers of shale oil in the U.S. are faced with much higher costs around $70-90 per barrel. Evidently the U.S. producers of oil will have to give in much earlier than the OPEC producers at least when it comes to the Middle East producers. We expect nothing will come out from the OPEC meeting, even thou there are some OPEC members favoring a production cut. OPEC pumped 30.97 million barrels a day of oil in October, exceeding its collective target of 30 million barrels for the fifth month.
Brent will trade at $70 a barrel in 2015 and 2016 while WTI may average $65, according to Societe Generale SA. Iraqi oil minister Abel Abdel Mehdi, said on Thursday, he saw a floor for oil prices at between $65 and $70 a barrel. Some fund managers have said oil prices could slide to $60 per barrel if OPEC does not agree to a significant output cut.
Rising U.S. shale oil production as well as increasing Chinese and U.S. oil stocks have boosted available supplies and also weighed on crude values, analysts say.
For the coming week we expect bunker prices to continue its downward trend.
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)
