World News
Brent Falls Back Under $40 as Kuwait Cools on Production Freeze, Goldman Adds to Price Warnings
"I'll go full power if there's no agreement. Every barrel I produce I'll sell." That was the message from Kuwait's acting oil minister Anas al-Saleh Tuesday, who was commenting on what he says will happen if major oil producers - including Iran - fail to collectively participate in a global oil production freeze.
"If there is an agreement, Kuwait will commit to the freeze," he added, but Iran has so far dismissed as "ridiculous" the idea that it should participate in the production freeze.
Speculation that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries are close to a deal has resulted in Brent prices as of Monday spiking 14 percent week-on-week, despite several analysts warning that there was little to justify the gains.
Bunker prices in the primary ports have also jumped a similar amount, Ship & Bunker data shows, with Singapore, Houston, Rotterdam, and Fujairah all seeing key grade IFO380 making gains of between $17 and $24.50 per metric tonne (pmt) in recent days.
Goldman Sachs Tuesday added to the warnings delivered over the last week, saying rising prices "simply are not sustainable in the current environment."
"Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an oil price rally will prove self-defeating, as it did last spring," the analysts added.
Unlike during the previous week, the market seems to be heeding to today's news; Having surged to over $41/bbl yesterday, Brent today finally ended its six day run and fell back under $40/bbl to close Tuesday at $39.63/bbl.
As Ship & Bunker reported yesterday, PIRA's Gary Ross still believes that the $50/bbl recovery will happen by the end of this year.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 510.00 | 2.50 | 611.00 | 4.00 |
| Rotterdam | 477.00 | 1.00 | 618.50 | 4.00 |
| Houston | 469.50 | 0.50 | 610.00 | 2.00 |
| Fujairah | 501.50 | 1.50 | 708.50 | 3.50 |
| Global 20 Ports Average | 532.00 | 2.00 | 711.50 | 0.00 |
| Global 4 Ports Average | 489.50 | 0.50 | 637.00 | 0.50 |
| Global Average Bunker Price | 571.00 | 1.00 | 759.00 | 0.50 |
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