Tuesday Bunker Update: Crude Prices Spike After Latest Threats from Iran

 

Oil Prices Fall as Offshore Strike Ends, China Shows Lower Crude Imports

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oil tankers crude ship vlcc Image (c) Shutterstock (Bloomberg) — Oil fell after Norway ended a strike that threatened to halt output by western Europe’s largest crude exporter and as China reduced purchases of the raw material. Futures dropped as much as 1.6 percent in New York after Norway’s government ordered compulsory arbitration in the dispute, preventing a platform workers’ lockout scheduled to start at midnight yesterday. China’s net crude imports fell to the lowest level this year, according to customs data today. “The strike is obviously putting downward pressure on prices,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “This is one more supply concern that we can put to the side.” Crude oil for August delivery declined 61 cents, or 0.7 percent, to $85.38 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices have decreased 14 percent this year. Brent oil for August settlement fell $1.15, or 1.2 percent, to $99.17 a barrel on the London-based ICE Futures Europe exchange. Brent’s premium to West Texas Intermediate crude, the grade traded in New York, was at $13.79 a barrel, down from $14.33 yesterday. Norway announced the arbitration in a statement published on the Oslo-based Labor Ministry’s website today. The strike, which started June 24, disrupted about 15 percent of the nation’s oil output, the Oil Industry Association said June 27. The nation pumps about 1.8 percent of global consumption, data from the Norwegian Petroleum Directorate show. Statoil ASA, Norway’s largest energy company, said it will resume full production within a week. Chinese Imports China’s General Administration of Customs said the nation’s net crude imports fell to 5.28 million barrels a day in June. That’s the least since purchases of 5.1 million barrels in December and compares with a record 5.98 million in May, according to data compiled by Bloomberg. China is the world’s second-biggest oil-consuming country after the U.S. The customs bureau also reported that China’s total imports of goods increased 6.3 percent in June from a year earlier, below the 11 percent median estimate in a Bloomberg News survey. Export growth was 11.3 percent, down from 15.3 percent in May. “The news from China is both good and bad,” Flynn said. “The weak import data may increase the likelihood of increased stimulus, which would boost demand.” Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.66 a barrel today, according to data compiled by Bloomberg. Futures yesterday rebounded after trading near that indicator. Buy orders tend to be clustered close to chart-support levels. Crude Bets Money managers increased bullish U.S. oil wagers in the seven days ended July 3, according to the Commodity Futures Trading Commission’s Commitments of Traders report yesterday. Net-long positions advanced by 10,994, or 8.9 percent, to 135,011 futures and options combined. U.S. oil supplies probably declined for a third week as refineries processed more crude to meet peak summer demand and as imports declined, a Bloomberg News survey shows. Stockpiles fell 1.38 million barrels in the seven days ended July 6, according to the median of eight analyst estimates before an Energy Department report tomorrow.
- by Mark Shenk, with assistance from Grant Smith in London (c) 2012 Bloomberg 

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Crude Prices Spike After Latest Threats from Iran

By gCaptain Staff On Strait of Hormuz, Image: NASA Anmerk.Verf.HP: von 1978/79 habe ich in Bushere AKW Hochtief in Persien gearbeitet und den Khomeini/Schahwechsel mitgemacht. (Dow Jones) Oil prices were solidly higher Tuesday morning on revived tensions over the Iranian nuclear program and renewed speculation about more Central Bank easing. Light sweet-crude futures on the New York Mercantile Exchange were trading up $3.89 , or about 4.6%, to $87.64. Analysts pointed to a new round of headlines over the Iran diplomatic crisis concerning the country’s alleged nuclear program. Traders don’t want to be caught short on oil in case the Iran situation builds further over the Independence Day holiday, said Carl Larry, president of Oil Outlooks and Opinions, a research and consulting firm. “We’re seeing a little bit of short covering ahead of the holiday,” Larry said. “This Iranian situation just seems to be getting bigger and bigger.” The European Union’s oil embargo on Iran took effect July 1. On Monday, an Iranian lawmaker said a bill was under consideration to block the Strait of Hormuz. The Iranian Revolutionary Guards Corps also launched several days of drills to test missiles capable of hitting targets as far away as Israel. The U.S. has also moved new forces into the Gulf to keep strategic waterways open, in part with an eye towards safeguarding the Strait of Hormuz, the New York Times reported Tuesday. The buildup was partly to reassure Israel that Washington is serious about addressing Iran’s nuclear program, the report said. “The energy complex is realizing its first significant dose of geopolitical-risk premium injection in some time,” said analyst Jim Ritterbusch in a morning note. Mr. Ritterbusch also gave an optimistic outlook on the significance of Friday’s news of a breakthrough on European Union sovereign-debt talks. “Although many questions and details regarding the EU summit decision remain unanswered, it appears that the euro-zone factor has been neutralized for the time being and a plunge in the euro currency into fresh low territory will be unavailable as a bearish price consideration for several weeks,” Mr. Ritterbusch wrote. Analysts said the focus will continue on economic indicators, such as factory orders later Tuesday or jobs figures on Friday. But there is growing speculation that weak economic indicators could prompt a further round of central bank easing. “If the numbers are bad, that’ll actually turn out to be good for the commodity markets,” said Mr. Larry. - John Biers, Dow Jones Newswires, Farnaz Fassihi contributed to this report.     By KPI Bridge Oil On   14-21 June 2012 Composite close – $660.95 MT Oil prices continued their fall this past week as WTI reached new eight month lows and Brent reached lows that have not been seen since December 2010.  The main reasons for the continued decline are largely unchanged.  Overall, when speculators run the market up beyond what is reasonable in anticipation of a major international incident that does not occur, this is what happens.  Significant sovereign debt concerns and lagging economies are not conditions that lead to increasing oil prices; despite what many investors have been betting on.  The most significant reason this week for a decline however, was that the US Federal Reserve chose not to institute quantitative easing number three. With a strong dollar, demand weak and no real prospect for growth, bunker prices have continued to decline in line with crude.  Since their peak in mid-March, the KPI Bridge Oil Composite has declined over $135 MT.  A gigantic decline in such a short period considering the majority of it has happened in the last two months.  Hopefully, this decline will strengthen shipping companies balance sheets going forward and boost the economies of the world. About the KPI Bridge Oil Composite The KPI Bridge Oil Composite is a calculated fuel number based on 14 ports strategically positioned worldwide.  It is calculated on a weekly basis blending 90% fuel oil prices with 10% distillate prices.  The idea behind the number is that it would represent actual fuel costs on a global basis and what vessels would consume on average.  This number will not fluctuate as quickly as daily prices and can easily be hedged or used for voyage calculations.  

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Tagged with: bunker fuelkpi bridge oil   About The Author

KPI Bridge Oil

KPI Bridge Oil is one of the world's leading international bunker broking and trading firms. With a network of offices that covers every major time zone, we have an in-depth knowledge of ports and bunker markets around the world. Our access to real-time market information and long-established credit lines with suppliers means we use our buying power in the right place and at the right time. All this ensures our customers enjoy competitive prices - and on favorable terms. Visit Authors Website →

A lot of news this week, but not much total change in oil prices.  Minute by minute volatility is the only constant we have in this market.  While it is more of the same news, a lot if the news items people have been speculating about have cemented.  The Spanish bailout happened, the market went down.  OPEC maintained their current production quotas, the market went down.  We reached the lowest level for oil prices since October 2011 this week. But by the end of the week, we were inching upward perhaps signaling the end to the precipitous decline in oil prices we have seen over the last couple of months.  All eyes are on the Greek election scheduled for Sunday and the potential for further Federal Reserve Stimulus in this country.  Things will certainly be clearer by the end of next week when these items are answered.  Bunker prices have remained mostly stable around the world. About the KPI Bridge Oil Composite The KPI Bridge Oil Composite is a calculated fuel number based on 14 ports strategically positioned worldwide.  It is calculated on a weekly basis blending 90% fuel oil prices with 10% distillate prices.  The idea behind the number is that it would represent actual fuel costs on a global basis and what vessels would consume on average.  This number will not fluctuate as quickly as daily prices and can easily be hedged or used for voyage calculations.
Related Articles:
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  4. Bunker Fuels Show a Downward Trend, but Decline Should Have Been Greater [REPORT]
  5. Bunker Prices Show Decline, Let’s Hope the Trend Continues [REPORT]
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About The Author

KPI Bridge Oil

KPI Bridge Oil is one of the world's leading international bunker broking and trading firms. With a network of offices that covers every major time zone, we have an in-depth knowledge of ports and bunker markets around the world. Our access to real-time market information and long-established credit lines with suppliers means we use our buying power in the right place and at the right time. All this ensures our customers enjoy competitive prices - and on favorable terms.
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