Bunkers Could be on the Way Down as Brent Dips 3% and More Downside Anticipated

With oil analysts predicting declines for crude, bunker buyers could also see savings.

Bunkers could be on the way down in the coming days, with analysts predicting that the soft start to the week for crude futures could continue.

Brent's new front-month contract on Monday fell 3.3 percent, at $45.83 per barrel, with a number of analysts pointing to the news Organization of the Petroleum Exporting Countries (OPEC) production was at a near-record high peak in April.

West Texas Intermediate Monday dropped $1.14 cents, or 2.5 percent, at $44.78 per barrel.

The declines came in the wake of reports that last week speculator bets on higher Brent prices hit all-time peaks, while WTI futures also witnessed what some saw as overly bullish activity.

"While such huge speculative length in the crude benchmarks isn't capable of independently reversing the strong up trend of recent months, it will certainly act to accentuate price declines," Jim Ritterbusch, president of Ritterbusch & Associates, was quoted as saying.

"Our high side parameters for both WTI and Brent have been achieved, and we would strongly suggest against purchases anywhere across the energy spectrum."

London-based Capital Economics said in note, "We would not be surprised to see the rally pause for breath soon and feel that the risks currently lie more to the downside."

How deep that downside may prove to be is unclear, but Morgan Stanley in a note pointed out that it expects the drop in the U.S. rig count that helped crude prices recover will end soon and shale producers will increase drilling: "History suggests a rig count bottom is imminent and increases are coming."

By contrast, Fatih Birol, executive director for the International Energy Agency, said during a G7 meeting in Japan Sunday, "In a normal economic environment, we will see the price direction is rather upwards than downwards," suggesting that oil prices may have reached bottom.

Reuters data last week revealed that OPEC's oil production caused supply to rise to 32.64 million barrels per day in April, compared to the 32.65 million bpd produced in January of this year, the highest output in Reuters survey records which began in 1997.