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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Is oil heading for the 70s or lower 60s?

By A/S Global Risk Management.



Michael Poulson, Global Risk Management. Image credit: Global Risk Management


Updated on 19 Feb 2018 09:37 GMT

Oil is these days highly affected by the financial markets, and, as they have recovered, oil has as well, and is now facing a decisive level. Is the price heading for the 70s or are we looking at lower 60s?

Looking at the fundamentals, both the US and Saudi Arabia are tightening their grip. On one hand, the US is increasing production rapidly. Not only is it pumping more barrels, but it looks like it is investing quite heavily in new rigs as the oil rig count is just shy of 800. This is a level last seen back in in 2015 when the market was way different. More important is production, which has surpassed 10 mbpd and is expected even higher during this year.

Saudi Arabia and the OPEC production cut they are involved in has been quite successful in assisting prices to a higher level. But is the level as high as they want? According to Bloomberg, the Saudi energy minister should last week have said: "If we have to overbalance the market a little bit, then so be it". This suggests that Saudi Arabia, if prices do not reach their desired level, it would be willing to prolong/renew the OPEC production cut. Next OPEC meeting will be in June.

In Louisiana, US, the oil port has completed its first ever loading of a VLCC. Such news is a clear sign of the US being an increasingly important player on the export market as its production is surging.

Today, Brent crude is expected to trade rather sideways, but could fluctuate when inventory stats are released later this week.



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.






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Brent remained around $64-65 yesterday as market digested oil comments and weaker dollar
A/S Global Risk Management Ltd.

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