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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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The day before the official OPEC meeting

By A/S Global Risk Management.



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


Updated on 21 Jun 2018 09:35 GMT

News and comments from meeting participants continue to cause intraday oil price volatility and at the time of writing, Brent oil price has dropped below $74.

The market has for quite some time been awaiting the official OPEC meeting, which starts tomorrow. While OPEC has been curbing production, all members have been rather certain and committed to the deal, and previous decisions of prolonging the deal have generally been undisputed. However, this time talks seem different leading up to the meeting. There has been chatter that Russian producers were unsatisfied with the large decrease in production they were imposed, which has resulted in Russia wanting to increase output from now on. Pulling the other way is Iran, which is about to have U.S. sanctions imposed - likely resulting in decreased exports. Iran has said that they are against OPEC increasing production. So, for the first time since the production cut started, there are some serious disputes between some major players. In the middle of this is the leader, Saudi Arabia, trying to find a solution to the current stance of the deal and the U.S. has allegedly pushed Saudi Arabia to increase output as well. Furthermore, the compliance rates to the initially agreed cut of 1.8 mbpd has been way above 100%, meaning that the actual reduction of output was way more barrels then 1.8 mbpd. Therefore, an increase of OPEC+ production during the rest of the year seems possible whether it is officially announced tomorrow or not.

The weekly oil inventory report from the EIA yesterday came out mixed with huge draw in crude oil stocks (5.9 mio. barrels), but also builds in distillates and gasoline stocks of over 2 mio. barrels respectively. This gave some additional intraday volatility around the time of publishing.



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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Mixed OPEC news and meeting keep oil price volatility high
A/S Global Risk Management Ltd.

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