Expert foresees no dramatic changes in bunker markets in the coming week
The Bunker Review is contributed by Marine Bunker Exchange
Oil prices have been steady on Thursday ahead of weekly U.S. stock data, despite fresh signs of an economic slowdown in China and Japan. Department of Energy (DoE) oil stocks report at 15:00 GMT, which is expected to show a rise. AT GMT 14:44 the current prices are: Brent: 47.97 up 0.39 and WTI: 44.97 up 0.82.
Crude oil prices have fallen more than 3 percent this week on persistent worries over global demand and a supply glut. The stage is set for a recovery but as long as we keep getting disappointing numbers out of China it will weigh and delay a recovery.
Oil prices have fallen over 50 percent since June 2014 as soaring output clashed with slowing economies in Asia, the main growth engine for commodities in recent years. The fall was compounded after the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, decided last
November to keep output high to defend market share.
Although the price drop has led to a slowdown in U.S. shale production, the main driver of supply growth in recent years, the supply glut is likely to persist due to lower production costs.
China’s push to establish a crude derivatives contract has been met with early skepticism, but oil executives say the country’s growing economic influence means a third global crude benchmark is inevitable.
The derivatives contract would give the Shanghai International Energy Exchange, known as INE, a slice of an oil Futures market worth trillions of dollars, offering a rival to London’s Brent and U.S. West Texas Intermediate (WTI).
China has become the world’s biggest oil trader, and that means that an oil price will be set there, like it or not. - Shanghai’s INE is in the final stages of launching crude oil futures, perhaps as early as October, although sources said delays were likely due to market turmoil.
Others, like the Dubai Mercantile Exchange (DME), have tried to establish an Asian benchmark, but have so far failed to attract sufficient liquidity to dominate the region.
For next week we expect the bunker market to be less volatile with no dramatic changes downward. Perhaps even steady as ‘she’ goes.
*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)