Bunker prices continue downward trend, Week 33
The Bunker Review is contributed by Marine Bunker Exchange
IEA’s report on Wednesday shows that oil prices steadied. Oil supply is growing but so is the demand. While slowing demand from China has helped bring down oil prices at a time of oversupply by big producers in the Middle East, oil demand elsewhere is accelerating.
The world oil market had begun to rebalance as low fuel prices stimulated extra consumption, IEA said on Wednesday.
The yuan hit a four-year low on Wednesday after China allowed it to weaken further after a mini-devaluation of 2 percent on Tuesday. China’s central bank made a second devaluation on Wednesday of 1,8 percent a total of 3,8 percent, to support the slowing Chinese economy, where industrial output grew less than expected in July.
China is the world’s biggest oil consumer after the United States and weaker yuan erodes Chinese purchasing power for dollar-denominated imports like oil, potentially hitting fuel demand.
World oil production is running at up to 3 million barrels per day above consumption, adding to stockpiles in all continents and depressing spot bunker markets for crude and oil products such as gasoline and jet fuel. But sharp price falls are beginning to encourage demand and the IEA forecast world oil demand would grow by 1.6 million barrels per day this year, up 200 000 bpd from its previous estimate and “the fastest pace in five years”.
In short term, the oil market is still worrying about the state of the Chinese economy, the largest consumer of most commodities, including many forms of energy such as coal. All is not well with the Chinese economy.
Another sign that the demand for oil is increasing was the U.S. stock draws demand from Wednesday. Oil price rose on Thursday as lower U.S. crude stocks and optimistic global demand projections overrode concerns about a glut of supply.
U.S. stockpiles of crude and gasoline fell last week by 1.68 million barrels and 1.25 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday, bolstering sentiment in the U.S. market.
Bunker price outlook for the coming week is a continuation of the downward trend, but periods of price stability.
* 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)
