A bunker fuel and oil report, detailing the day per day trading patterns and prices in the market.The report is prepared from OW Risk Management and covers all major bunker fuel oil markets around the world, including all major ports, ranging from Singapore to Rotterdam.

Market in Brief

Crude prices continued to be driven by the WTI/Brent spread as market took profit on the recent narrowing. It closed back in the black at +$1.12/bbl. Goldman Sachs said that “WTI Crude will trade at a discount to $8- 9 a barrel to Brent next year amid rising shale Oil production”. The September WTI Oil future contract fell -$1.28 to close at $106.94/bbl and Brent managed to stay in positive territory by +$0.08 to settle at $108.15/bbl. The US Existing Home Sales reported lower figures at 5.08 million against 5.25 million expected. Despite this weaker data, the general view is that the US economy is improving steadily. Economists are betting that the Federal Reserve will in September reduce its monthly bond buying from $85 billion to $65 bln. China stock index rose the most in two weeks as investors speculated the government will boost the economy through increased infrastructure spending to maintain economic growth above 7%. Oil prices remain firm as we are in full US summer driving season and are approaching the Hurricane season. The API inventory report will be released later today and the US inventories have seen 3 straight sessions of crude draws as bottlenecks at Cushing are relieved enabling better flows; built are seen on  products. This morning, crude is trading  down.

Fueloil Specifics

The NWE bunker fuel oil prices fell slightly at the start of the week following general trend in the market. Suppliers reported weak seasonal demand and generally good avails. Delivered 380cst product in Rotterdam and Antwerp posted app.$3/mt losses versus previous close. The Singapore fuel oil market slipped between -$1.0 to flat during the morning Platts window yesterday. The market remains well supplied while demand softened. The delivered bunker premiums also stayed lower, between +$4.5 to $6.0 above cargo prices yesterday. Bunker fuel oil swaps posted $4.5-5.0/mt losses along the curve both for Rotterdam and Singapore papers. 3.5% Rtdam FOB Barges forward curve remains in backwardation with September assessed at app.$10/mt discount to spot prices while cal14 is trading at nearly $25/mt discount compared to the spot. Totally other story is with Singapore 180sct Cargo FOB where September is offered at the premium of app.$1.5/mt vs spot and only some $6/mt discount for cal14. This morning both markets are trading slightly higher.

Settlement & Indications (mid values)

Product Yesterday's Values Forward Indications Product Change Last Dir. Aug Sep Oct Q413 Q114 2014 NYMEX WTI Swap (1st month) (1,28) 106,94 ↓ 105,85 104,43 102,89 101,44 97,81 94,52 ICE Brent Swap (1st month) 0,08 108,15 ↓ 107,46 106,64 105,94 105,31 103,44 100,96 ICE Gasoil Swap (1st month) (7,25) 918,50 ↓ 915,33 914,58 912,00 908,83 893,92 878,65 3.5% Barges FOB Rtdm (4,50) 595,75 ↑ 595,50 588,00 585,50 583,25 581,75 573,00 3.5% Cargoes FOB Med (3,50) 598,00 ↑ 589,50 582,25 579,75 575,25 573,75 568,00 1.0% Cargoes FOB NWE 1,00 601,25 ↑ 608,50 610,75 612,50 611,25 610,25 599,00 3% no. 6 USGC WB (0,62) 90,60 ↑ 92,00 92,00 91,50 91,70 91,00 90,25 380 CST Cargoes FOB S'pore (0,75) 605,25 ↑ 606,00 607,00 607,50 606,50 603,75 596,75 0.1 % GO Barges FOB Rtdm (6,50) 918,00 ↓ 916,25 916,25 913,25 910,25 901,25 880,25 Physical Rotterdam 380 CST (3,00) 604,00 ↑ 600,75 593,25 589,75 588,00 586,00 577,25 Physical Singapore 380 CST 0,00 611,00 ↑ 611,25 612,25 612,75 611,25 608,00 601,00

Focus of the day: ARA

The past week proved to be very slow in trems of demand. Hardly any fuel being traded in the window, spot prices remain under pressure, emphasizing we are still in a buyer’s market. The backwardation is coming off a bit, presenting even better opportunities to fix prompt fuel. Low sulphur fuel was assessed at a low of only three dollars premium, before it was slingshot to 12 dollars in merely two days. It is expected to rise further; now high sulphur is under less pressure. The gasoil market has not done anything special lately. Some notification is advised, as prompt fixing proves to be slightly more difficult, due to early commitment by gasoil suppliers. Notification periods for the different grades: four days for high sulphur enquiries and three working days for low sulphur enquiries.

Economy fundamentals this week

Fundamental Indicators Statistic Importance Date Time Period Consensus Last Actual Existing Home Sales Medium 22-Jul 10:00 AM Jun 5.18M 5.25M 5.08M New Home Sales Medium 24-Jul 10:00 AM Jun 470K 476K - Initial Claims Medium 25-Jul 8:30 AM 20-jul 340K 334K - Continuing Claims Medium 25-Jul 8:30 AM 13-jul 2980K -6.902M - Durable Orders High 25-Jul 8:30 AM Jun 3.7% 0.6% - Michigan Sentiment- Final Medium 26-Jul 9:55 AM Jul 84.2 83.9 -

Source: OW Risk Management