Expert predicts further bunker market volatility
The Bunker Review is contributed by Marine Bunker Exchange
Crude oil futures, Brent and WTI, extended gains from the previous session on Thursday as a weaker dollar and unconfirmed talk of producers potentially meeting to discuss output cuts lifted the market despite record U.S. stocks due to overproduction.
But despite the rise, analysts said prices would remain low in 2016 and 2017 as global demand slows and inventories swell.
Crude futures were trading as follows at GMT 15:08: Brent $35.49(+0,45); WTI $33.07(+0.79) on Thursday, up on previous session’s close when the market rallied 8 percent.
Analysts said prices had recovered on a sliding dollar and from ongoing, yet unconfirmed, talk of a potential meeting of oil producers to cut output in support of prices, which have fallen around 70 percent since mid-2014.
U.S. crude inventories climbed 7.8 million barrels in the week to January 29 to a record 502.7 million barrels, compared with analyst expectations for an increase of 4.8 million barrels. U.S. gasoline inventories rose to a record high of 254.4 million barrels.
Analysts remain largely bearish in their outlook, pointing toward persistent oversupply and slowing demand, which will last well into 2017.
Morgan Stanley on Thursday lowered its average 2016 Brent price forecast to $30 per barrel, down from $49 previously. The bank only expects an average price of $40 per barrel in 2017 as oversupply persists.
Saudi Arabia lowered March pricing for Asian oil customers as the world’s largest crude exporter shows no signs of letting up on its campaign to keep market share, especially with Iran set to boost sales.
Oil has lost about 6 percent this year on the outlook for increased exports from Iran after the removal of international sanctions. Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, had output in January that was close to a record one month after OPEC abandoned its oil-production targets.
For next week we expect the volatility to continue. One day up and next day down.
* 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)