World News
Oil Rises As Traders Ignore Massive U.S. Stockpile Build, Favour Fujairah Draw
With a spectrum of data both bullish and bearish to the crude market, traders on Wednesday chose stockpile declines and timespreads indicating tight supply to justify causing prices to settle higher – but still well within 2024's narrow range of roughly $10.
West Texas Intermediate settled up 87 cents at $77.91 per barrel, while Brent settled up 69 cents at $83.03 per barrel.
Following earlier news from Bloomberg that “the difference between monthly contracts has been widening, indicating a more robust outlook in parts of the physical market,” it was acknowledged that oil contracts tied to near-term deliveries over the past few months have been trading at their steepest premium to later-dated contracts, a sign of market tightness.
Traders also were impressed by reports of stock draws in the Amsterdam-Rotterdam-Antwerp trading hub as well as in Fujairah – enough to ignore figures from the American Petroleum Institute showing a 7.17 million barrel build in U.S. crude stocks last week (official data will be released on Thursday).
Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA, said the “oil price is expected to continue to be range-bound short term despite escalating tensions in the Middle East…..continued strong non-OPEC production data, from Norway and Canada this week, combined with a soft global economic outlook counter the effect of higher Middle East tensions.”
While attacks on ships in the Red Sea and the Israel-Hamas war have added a risk premium to oil prices, gains have been capped by concerns over supply growth from non-Organization of the Petroleum Exporting Countries and worry over China’s economy.
Meanwhile, the roller coaster of insinuations from U.S. Federal Reserve officials continued on Wednesday, with reports of them arguing during the central bank’s January meeting that interest rates have likely peaked; however, they also generally agreed the rates should remain intact until inflation was more clearly under control.
Finally on Wednesday, analysts at Deutsche Bank said robust demand and a nearly balanced market so far in 2024 will push Brent prices to $88 per barrel by the end of the year.
They wrote in a note, “We look for continued OPEC+ discipline in a nearly balanced market for H1, and seasonal strength in H2.”
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 624.50 | 1.00 | 732.00 | 8.50 |
| Rotterdam | 571.00 | 3.00 | 758.00 | 16.50 |
| Houston | 591.50 | 4.00 | 760.00 | 5.50 |
| Fujairah | 629.00 | 0.50 | 877.50 | 3.00 |
| Global 20 Ports Average | 637.00 | 0.00 | 819.00 | 3.00 |
| Global 4 Ports Average | 604.00 | 0.00 | 782.00 | 5.50 |
| Global Average Bunker Price | 688.00 | 2.50 | 879.00 | 1.00 |
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