World News
Crude at Eight Month Low: Will Bunker Prices Continue To Fall?
West Texas Intermediate (WTI) crude's spot price closed down at $81.80 per barrel today, sliding down $2.23 to its lowest level since October last year.
The drop follows an unexpected rise in U.S. crude oil inventories which made a week-on-week gain of 2.9 million barrels to 387.3 million barrels, the U.S. Energy Information Administration (EIA) announced in its Weekly Petroleum Status Report for the week ending June 15, 2012.
Prior to the report, the stockpile levels had been tipped to drop with Platts reporting an anticipated 600,000-barrel decline following a survey of analysts.
The EIA said inventories are now above the upper limit of the average range for this time of year.
Several news agencies had analysts attributing the increase to a slowdown in demand, and supply volatility, with CNN quoting Carl Larry, president of Oil Outlooks, as saying, "We're seeing fluctuation because there's not a lot of oil production going on.
"But mostly, I think we need some kind of stability on the demand side. We need economic stability."
$75 a Barrel
Crude prices have dropped sharply since they slipped below the $100 mark on May 4, 2012, and bunker prices have followed suit.
Since May 1, 2012 key grade IFO380 has lost an average of just over $129 per metric tonne (pmt) across global indicator ports Singapore, Houston, Rotterdam, and Fujairah, with almost $90 of that drop occurring during May.
At the start of the month, Ship & Bunker said there was little evidence to suggest prices would rise in the immediate future, and some analysts think crude has still not hit its bottom price.
"Can we see oil prices going down to $80 or even $75 a barrel? Very likely," a senior New York-based commodities banker told the Financial Times.
"Saudi Arabia appears comfortable allowing prices to continue to drop," he added.
If that happens, then bunker prices too may have not yet reached their low point.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 491.00 | 2.50 | 592.50 | 16.50 |
| Rotterdam | 445.00 | 13.00 | 593.50 | 11.00 |
| Houston | 443.50 | 6.50 | 601.50 | 5.50 |
| Fujairah | 487.00 | 10.50 | 711.00 | 12.00 |
| Global 20 Ports Average | 517.50 | 1.50 | 697.00 | 3.00 |
| Global 4 Ports Average | 466.50 | 3.50 | 624.50 | 0.00 |
| Global Average Bunker Price | 559.50 | 2.50 | 736.00 | 2.00 |
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