Crude Price Roller Coaster Ride Continues, HSFO Discount to Brent Remains Unusually Thin

Energy analysts expect oil market volatility to continue into the New Year. File Image / Pixabay

Oil prices Thursday were still on the same wild the same roller coaster as stocks, easing back at the end of today's session after embarking on a blockbuster 8% boxing day rally, but were already registering gains of around 3% in early Asia trade.

Crude prices Wednesday had closely tracked what the business press were quick to dub The Miracle on Wall Street; the Dow Jones Industrial Average making its biggest single day gain of 1,086 points yesterday.

But after the Dow fell as much as 611 points today, crude prices followed with a decline of around 4%: WTI ended Thursday's session at $44.61/bbl, and by mid-afternoon New York time Brent had retreated $2.45 to $52.02/bbl.

"The market is giving back some of its gains from yesterday that were brought along with the euphoria in the stock market," Reuters quoted Andrew Lipow, president of Lipow Oil Associates, as saying.

But in a late turnaround, the Dow ended the day up 260 points, or 1.1.%, and crude prices were already registering gains of around 3% in early Asia trade.

If nothing else, this week's erratic movements reinforce the view of a growing majority of Energy analysts that the recent oil market volatility will continue into the New Year.

As to what happens beyond that there is less of a consensus. Bank of Japan policymakers today warned the global economic outlook was worsening, but a Bloomberg survey suggested fears of a recession were easing, at least among the poll's participants, who indicted they expected an average of $70/bbl in 2019.

How this will translate to bunker prices remains unclear, with the HSFO discount to Brent remaining unusually thin with IFO380 in the major ports today priced at less than 6% of Brent.