Crude Prices Continue to Rise as Several Nations Back an Extension to Oil Output Cuts

Crude prices Thursday made a third day of gains, with the market seemingly buoyed by reports that Kuwait is among several nations calling for an extension to the current curbs on oil production by both Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC nations.

WTI Thursday broke back over the $50/bbl mark, closing up $0.84 at $50.35/bbl, while Brent gained $0.54 to end the day at $52.96/bbl.

Bunker prices have also bounced this week; Ship & Bunker's Global 20 Ports Average price for IFO380, which tracks average bunker prices across 20 ports responsible for the vast majority of global bunker sales, Thursday rose to $305/mt, having started the week at a 2017 low of $300.50/mt.

PVM Oil Associates analyst Tamas Varga was one of several analysts to suggest the uptick for crude meant there is a "significant chance" that the market bottom had been found - at least for now.

Meanwhile, Kuwait oil minister Essam al-Marzouq's positive comments over extending the oil output cuts lead Scott Shelton, energy futures broker with ICAP, to comment: "I see no sign from OPEC and Saudi Arabia that they will not roll over the cut into the second half of the year ... the market is about to go from supply surplus to deficit on crude."

Shelton is certainly not the first to warn of an impending change to the supply and demand picture.

As Ship & Bunker reported yesterday, Daniel Jaeggi, president of Mercuria Energy Group Ltd., who was speaking at the FT Commodities Global Summit in Lausanne, Switzerland, said current project spending is focused on "short-cycle" U.S. shale deposit projects, and that "we are sowing the seeds for potential instability in the future and more volatility: you won't be able to satisfy demand with short-cycle barrels."