Market in Brief

Crude corrected by more than $2.5/bbl after recent highs. The August WTI contract closed at $84.45/bbl down by $2.77 and Brent lost $2.51/bbl to close at $98.19/bbl. The US nonfarm payroll data showed an increase by 80K only, less than an expected 100K while June unemployment rate remained at 8.2%. This is far away from a 200k new jobs creation that the US should be posting to resorb the high unemployment level.The bearish data weighted down heavily on equities and the Euros. Oil workers' in Norway are still on strike and investors are also watching closely the developments in Iran with the Crude Oil embargo from the EU. This morning crude is trading up.
 

Fueloil Specifics

Bunker fuel prices lost almost $20/mt both for cargoes and delivered 380cst product. The NWE market saw a plentiful supply of products from the FSU recently as the arbitrage to Asia remained closed. Logistics in the ARA port hub is fine as well causing no major delays of bunker supply. The rest of the European bunker markets run rather smoothly as well besides a degree of tightness in LSFO products, which is largely attributed to an increased demand caused by the upcoming North American ECA. The Singapore fuel oil markets prices were assessed up by $2.50/mt during the Platts window last Friday. The fundamentals are weighed down by heavy supply condition in Singapore as July incoming cargoes are expected to be at 2.8 - 2.9 million mt. The bunker premiums fell back to approx. $7.75 above cargo prices last Friday as crude prices softened after the window. Bunker fuel swaps closed the last week heavily down. Front month papers lost approx. $17.5 on close. Forward prices held notably stronger with 2014 papers being down by approx. $12.5/mt. As a result $5/mt had been shred from the backwardation discount limiting it to approx. $20/mt for 2013 papers and $30 for 2014. Both markets are trading up this morning.
 

Settlement & Indications (mid values)

Economy fundamentals this week

Technical indicators

Energy contracts corrected last Friday after a degree of strengthening seen at the end of June / beginning of July. The technical picture is somehow uncertain but largely similar for all contracts. We have the contracts trading between the nearby support from MA8 and resistance from MA5 and they both limit the current range. The levels shall be watched as eventual break in any direction on any of the three charts might push the rest of the contracts out of the range. On a larger scale we would probably expect a move above the last Thursday’s top but a degree of correction might precede it. MA34 has come to play on all charts and it remains to be seen if the level will be able to provide a sufficient support. Note a weakness of EUR/USD; it makes a general picture worrying.