MABUX: Bunker prices’ rebound to continue downward, with periods of volatility
The Bunker Review is contributed by Marine Bunker Exchange
WTI and Brent crude fell sharply after U.S. inventories rise. Brent crude oil slipped below $59 a barrel on Thursday after another big weekly build in U.S. crude inventories and a possible rise in Saudi output stoked worries about oversupply.
U.S. crude stocks rose by 14.3 million barrels last week, data from industry group the American Petroleum Institute (API) showed after Wednesday’s settlement, compared with analyst’s expectations for an increase of 3.2 barrels. If Energy Information Administration confirms the number on Thursday afternoon, it would then be the biggest weekly addition in barrels since such data became available in 1982.
Note that the API and EIA reports are a day late this week because of a U.S. holiday on Monday. The inventory figures were the trigger for the sharp correction lower.
The market has a tendency to retreat after swelling U.S. crude inventories, but then rally after falling U.S. rig-count numbers, which come out every Friday.
A build of 7 to 9 million barrels would be enough to push prices lower, and at the same time the world’s biggest exporter Saudi Arabia may be increasing to near 10 million barrels per day. – Protecting market share rather than cutting production.
In Libya violence has battered oil output. Production fell to 350.000 barrels a day in January, compared with 1.6 million barrels a day before Qaddafi was toppled.
The beheading of the 21 Coptic Christians triggered Egyptian airstrikes on Derna, Islamic State’s stronghold in eastern Libya. Within Libya, the government in Tobruk headed by Prime Minister Abdullah Al-Thinni and its Islamist rival in Tripoli say they will do everything in their power to stop Islamic State.
For the coming week we expect bunker prices’ rebound to continue downward but with periods of volatility.
* MGO LS
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)
