Bunker prices to continue descent next week, expert says
The Bunker Review is contributed by Marine Bunker Exchange
Oil prices steadied on Thursday after a weaker dollar helped offset the negative impact of rising U.S. stockpiles, which drove U.S. crude prices to near three-month lows.
Crude oil stocks in the U.S. rose unexpectedly 2.5 million barrels last week to above the five-year seasonal average, according to data from the Energy Information Administration (EIA), meanwhile a drop of 2.3 million barrels were expected.
Brent has lost around 12 percent in July, its largest one-month fall since March, mainly due to the constant oversupply of crude oil and it is expected to get worse, if and when sanctions against Iran is being lifted. The oil glut looks set to grow as an Iranian nuclear deal with the West is likely to release millions of barrels of additional supply onto world markets. The bears are still in control of the market.
A close below $55.60 for Brent, is a sell off sign and there is nothing really that could stop this contract from falling down to $53.19, the daily low in August contract on Jan 13.
Still, OPEC delegates from Gulf States and other nations say the recent drop in oil prices is likely to be short-term. They say lower prices will not deter the cartel from keeping output high to defend market share and the result of such reasoning will continue to cause overproduction and lower oil prices and lower bunker prices for the shipping industry.
Some traders believe crude oil is being stored by Iran in floating storage, two Iranian oil officials said on Thursday that the oil was condensate and fuel oil. Millions of barrels of crude could be shipped to Iran’s customers on short notice once the sanctions have been lifted, causing negative impact on the market already suffering a supply glut. – However Iranian officials, who declined to be identified due to company policy, said there is no crude oil in the floating storage, only condensate and fuel oil.
Brent crude oil has fallen about 4 percent since the deal on concerns of the impact of a prompt release of the estimated 40 to 50 million barrels of Iranian crude and condensate from floating storage. Iran is reluctant to let the market know the truth how much crude is being stored because of concerns it could depress oil prices further down.
Bunker price outlook for the coming week is a continuation of the downward trend, which we have experienced for some time now.
* 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)