Bunker prices to flatten out, likely to stay at today's level, expert says
The Bunker Review is contributed by Marine Bunker Exchange
Brent steadied at around $48 a barrel on Thursday, as investors sought bargains after a sharp fall the previous day on an unexpectedly large buildup in U.S. gasoline stocks and a tepid demand outlook.
Brent crude oil ended the previous session down $1.33 and WTI slumped $1.88 on Wednesday. It seems there is some technical stabilization at the $48 level for the Brent.
Crude prices fell sharply on Wednesday on data from the Energy Information Administration (EIA) that showed a bigger-than-expected rise in gasoline stockpiles in the U.S.
Higher inventories and sluggish demand make many analysts think the long-term outlook for crude will remain downbeat. Long-term, many analysts see a continuing supply surplus weighing on the market. Despite early signs of a cutback in U.S. shale production, the underlying supply and demand funDamentals remain weak for both Brent and WTI.
Long dated contracts are ticking lower and that will drag prompt prices lower as well, to ensure there is still a “contango”. – Contango is a market structure in which prices are higher at later dates than for prompt delivery, making it profitable to store oil.
Even with Thursday’s rather limited recovery, oil prices are still down more than 25 percent from this year’s closing peak in June on speculation a global glut will be prolonged. While U.S. crude stockpiles declined for a second week through Sept. 18, they remain almost 100 million barrels above the five-year seasonal average. Crude stocks fell because imports of crude remained low.
Brent and WTI were both trading in negative territory $47.68 (-0.07) and $44.22 (-0.26) at GMT 13:47 on Thursday.
Rigs in the U.S. keep shutting and imports are down, so at some point this must bite into inventories. But market has been range-bound for the past few weeks, testing the upside but failing to remain above $50 a barrel. The rise this morning on Thursday was probably technical – profit-taking.
Venezuelan President Nicolas Maduro reiterated the nation is seeking to stabilize prices with the cooperation of other OPEC members, according to a Petroleos de Venezuela SA statement posted on the company’s website. OPEC has pumped above its 30 million barrel quota for the last 15 months.
For next week we expect bunker prices to stabilize around today’s level.
* 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)
