Bunker prices likely to edge up next week, expert says
The Bunker Review is contributed by Marine Bunker Exchange
Another week has passed and we predicted last week that bunker prices would hover around $25-28 a barrel. It did not happen. Instead oil prices started to bounce upward one day and next day down but not fully and left a margin upward every time it bounced to and fro. Oil prices are now well above $30 per barrel.
It began with a rumor beginning of the week that the Russians were interested in talking to the Saudis. Market responded quickly and oil prices started to pick up a little by little every day.
Oil Futures are trading on Thursday at GMT 14:51 Brent $34.84 (+1.74), WTI $34.06 (+1.76) a barrel. Quite a significant change but will it hold?
Russian officials have suggested that they would like to meet the Saudis and other OPEC members and discuss how they together could curb the flow of crude oil. All supplying countries are suffering badly due to the low oil prices it seems that everybody is ready to go forward and do something drastic.
Another sign that something is cooking – hedge funds have begun to sell off some of their short positions, which is a speculation that market goes down.
In the meantime the U.S. shale oil drillers are losing money on every ton of crude oil being produced, which means they are running out of funds and cannot continue. OPEC’s tactic has worked so far.
OPEC’s strategy of flooding markets to drive out higher-cost suppliers has pressured oil prices to the lowest in 12 years, prompting producers to delay investments and cut costs.
Saudi Arabia’s deputy minister for company affairs at the Ministry of Petroleum and Mineral Resources said on Thursday in Tokyo that OPEC estimates global oversupply to be around 2 million barres per day.
“It will take some time for the market to rebalance,” said Aabed A. Al-Saadoun. “We feel that the market will begin to come into balance in 2016 and that demand for energy in all forms will continue to increase.”
The Energy Information Administration said on Wednesday that U.S. crude inventories climbed by 8.4 million barrels last week, higher than analyst expectations for a rise of 3.3 million barrels. That brought crude inventories to the highest level since the EIA began tracking the data.
We expect bunker prices to edge upward during the coming week but occasional rebounds are likely.
* 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)
