Shipping Prices Climb As Oil Fills Cargo Hulls

Crude reversed earlier gains to trade down 12 cents at 48.42 while Brent oil climbed 5 cents to 51.98 after Wednesday’s US EIA inventory after weekly inventory data showed U.S. stockpiles of crude oil and petroleum products at a record high. On Thursday morning Asian traders pushed WTI back to 48.06 gaining 25 cents while Brent oil eased by 11 cents to 51.55.

Oil prices were roughly flat after rallying earlier in the morning yesterday. The pullback came after the Energy Department reported that U.S. oil inventories rose by 3.1 million barrels last week and demand for oil fell slightly. Oil had rallied earlier on signs that producers were cutting back production, but a build in inventories shows there is still soft demand for crude. Analysts surveyed by The Wall Street Journal had predicted supplies would rise by 2.5 million barrels on the week.

Gasoline supplies also rose, but stockpiles of distillates, including heating oil and diesel fuel, fell.  Gasoline prices declined 316 points to 1.4062. Gasoline prices continued to tumble in the morning session falling 73 points to 1.3955.

Total supplies of crude oil and petroleum products rose by 2.3 million barrels to 1.3 billion barrels, a record in EIA data going back to 1990.

Oil prices traded in a narrow range in September as investors assessed how long the global glut of crude oil—which sent prices plunging in the past year—would persist. While production has started falling in the U.S., supporting prices, robust output from other areas and ongoing concerns about consumption kept prices subdued last month.

ICE Brent oil futures logged their highest settlement in five weeks on Tuesday, as the Organization of the Petroleum Exporting Countries forecast big cuts to oil investments that are expected to ease production and reduce global crude supplies. Speculation over a possible meeting among the major oil producers also provided support for oil prices, ahead of weekly updates on U.S. petroleum supplies.

Another concern lingering on investors’ minds is whether the global economy is experiencing a downturn. Those fears were stoked by a report from the IMF that China’s slowdown and tumbling commodity prices will push global economic growth this year to the lowest level since the 2009 recession.

The fund forecasts that the world economy will grow 3.1 percent this year, down from its July forecast of 3.3 percent and also below the growth rate of 3.4 percent last year. The IMF expects Chinese economic growth to drop to a 25-year low of 6.8 percent this year, unchanged from its July forecast.

An unexpected market in fact hit a major price milestone on Monday. Oil shipping and store rose to its highest level in 5 years. Platts reported that chartering prices for VLCC (very large crude carrier) ships rose to $100,000 per day on Monday. The first time rates have hit this level since 2010. Rates are reportedly running especially high for VLCCs sailing from the Persian Gulf to East Asia. As well as for vessels chartered from West Africa, headed to Asia.