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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Mixed news keeps oil prices in tight range... for now

By A/S Global Risk Management.



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


Updated on 27 Jun 2018 08:29 GMT

As Saudi Arabia pledges to increase output by about 1 mbpd, some market analysts are starting to worry about their spare capacity. Lately, Saudi Arabia has been producing about 9.8 mbpd and allegedly had a spare capacity of 2 mbpd. As this capacity shrinks, the oil price gets more sensitive to shocks as a supply outage becomes more probable. There is some validity in this concern as the market is yet to experience the true impact of the sanctions against Iran. The sanctions officially kick in from the start of November, and currently no one knows exactly how many barrels they are going to cost the market in terms of supply. The U.S. is, however, urging its allies to stop importing Iranian oil, and exports from Iran are said to have already decreased by 400 kbpd. Some news suggests that crude supply from Iran could end up being lowered by as much as about 800 kbp d

The U.S. WTI price is at the moment in the upper $70 range and approaching $71 today as a 360 kbpd supply outage originating in Canada is in effect. Most likely, this has resulted in major draws on the American crude oil stocks, and indeed the API yesterday reported a draw of 9.2 mbbl. Furthermore, API reported an increase of 1.8 mbbl in distillate inventories and an increase in gasoline inventories of 1.2 mbbl. Today, the EIA is releasing its inventory stats where crude oil inventories are expected to show a draw.



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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