It was a wild ride in the oil markets this week as crude prices fell off of a cliff today and WTI is now lower than $100 BBL.  While the KPI Bridge Oil Composite actually increased over the last week this was due to residual fuel costs rising out of line with crude prices.  It should come as no surprise next week if it is much lower.

The main impetus for lower oil prices this week has been slowing economies of the world.  The jobs reports were worse than expected both here and overseas, Spain has announced they are officially in recession and manufacturing data was worse than expected.

All of these items have created a lot of doubt over future demand.  While this is not a good sign for global economies, it is good to see some rational thought returning to the commodities markets.  It is however unlikely that we will see a tremendous decline until the situation in Iran is sorted.

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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