Rotterdam Bunker Prices Fall Under $200 as Global Oil Glut Hits Record 3 Billion Barrels

Global demand growth forecast to slow next year.

Tumbling bunker prices that Friday slipped under $200 per metric tonne (pmt) in the key ARA market, look set to remain under pressure following a report by the International Energy Agency (IEA) that global oil stockpiles have hit almost 3 billion barrels. 

"OECD commercial inventories rose counter-seasonally by 13.8 mb to stand at a record near-3 billion barrels by end-September," said IEA.

"The pace of global stockbuilding slowed during the third quarter to 1.6 mb/d from 2.3 mb/d in the second quarter but remained significantly above the historical average."

Ship & Bunker data Friday showed Rotterdam IFO380 prices had fallen to $198.50 per metric tonne, and below levels seen in August of this year when a number of ports witnessed their lowest prices in the last 10 years.

"This massive cushion has inflated even as the global oil market adjusts to $50 per barrel," said IEA.

"Demand growth has risen to a five-year high of nearly 2 million bpd... But gains in demand have been outpaced by vigorous production from OPEC and resilient non-OPEC supply - with Russian output at a post-Soviet record and likely to remain robust in 2016 as well."

Looking ahead, IEA predicts global demand growth for crude to slow in 2016 to 1.2 million barrels per day (mbpd) after hitting highs this year of 1.8 million bpd, helped along by low oil prices, colder winter weather, and post-recessionary bounces in some countries.

Meanwhile, the IEA said that supply of crude from non-Organization of the Petroleum Exporting Countries (OPEC) countries is expected to contract as expected, largely due to continued pullbacks in the U.S.

OPEC supply, however, is expected to remain steady.

On Friday Ship & Bunker reported that OPEC was looking to lift its production target by 1 million bpd at its upcoming December 4 meeting.