Bunker prices to continue downward slide, Week 35
The Bunker Review is contributed to IAA PortNews by Marine Bunker Exchange
Oil's weeks-long slump accelerated sharply on Monday with prices tumbling more than 5 percent to fresh 6-1/2-year lows as a renewed dive in the Chinese equities market sent global financial markets into a tailspin. - Monday's falls are not about oil market funDamentals. It's all about China.
A near 9-percent tumble in China shares roiled global markets and sent the Dow Jones Industrial Average down more than 1,000 points in early trading. Wall Street pared losses by mid-morning, briefly easing oil's losses, but a second wave of selling re-emerged in the afternoon. Since then the Oil Market has recovered but not fully.
On Thursday oil prices jumped more than 4.5 percent after a rally in equity markets and an unexpected fall in U.S. crude inventories, but worries over the Chinese economy and a global oil glut kept the outlook uncertain.
Oil markets moved up from six-and-a-half-year lows reached earlier this week, but investors are still worried about huge fuel oversupply, which is depressing oil for immediate delivery and filling stockpiles worldwide.
"The trend is strong and down. However, do not be wrong-footed by a correction higher," PVM Oil Associates technical analyst Robin Bieber said. "Few markets head forever in one direction with no respite." One should not underestimate the current bearish momentum and still believe that it is possible to see prices break supports of $38 and $45 for WTI and Brent because of the persisting oversupply and under-demand.
Standard Chartered cut its 2015 Brent forecast by $10 a barrel to $54, and slashed its 2016 forecast by $20 to $63. The bank also expects U.S. crude (WTI) to average $48 in 2015 and $58 in 2016.
Oil prices were supported by data on Wednesday showing U.S. crude inventories fell 5.5 million barrels in the week to Aug. 21, the biggest one-week decline since early June. Analysts had expected an increase of 1 million barrels. But some analysts said the inventory fall may be connected to lower import figures for last week and may not mark the start of a trend.
At GMT 1245 Thursday market was up: Brent: $44.77 up 1.63 pbl, WTI $40.07 up 1.47 pbl.
For next week we expect bunker prices to start declining again mainly due to the oversupply. As long as nobody of the Big Three, as we like to call them – Russia, U.S. and OPEC, are not doing anything at all to reverse the oversupply the downward trend will persist.
* 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)
