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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil hit by financial market downturn

06 Feb 2018 09:35 GMT

By A/S Global Risk Management.



What has pushed down the crude oil price is primarily financials. The level of the financial markets has decreased quite a bit since the end of last week, as well as commodities markets. In addition, the USD index has gained strength, which is likely weighing on oil prices even though the index value is relatively low.

Looking at fundamentals in the oil market, US production has been surging for a long time now, and expectations are that it will continue through 2018. Meanwhile, the monthly production has exceeded 10mbpd, which is a huge milestone. It definitely has potential of weighing down on prices, especially if it means that the long streak of draws on the US inventories will break decisively. The streak broke last week as the EIA reported an increase in crude stocks of 6.8 mbbl. If there will be builds going forward the market could be taking a breather from the 70's and trade in the mid 60's. We are entering refinery maintenance season. Signs of the season is already showing in the US refinery utilization percentages which has dropped from 96.7% in end December to 88.1% last week, meaning the refiners will demand less crude oil.

An important fundamental indicator this week is the inventory stats coming up tonight and tomorrow afternoon.



A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.


Image: Michael Poulson, Oil Risk Manager at A/S Global Risk Management. Image credit: A/S Global Risk Management




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