Market in Brief

Crude prices extended their gains yesterday and closed higher for the fifth day in a row for Brent. The September WTI contract closed at $93.67/bbl, up +$1.47 while Brent settled at $112.00/bbl, up +$2.45. The market started sideways but jumped on news that Germany was finally supportive of the ECB plan to buy Spanish/ Italian Bonds. The API compiled US inventory data saw a surprise massive draw of crude inventory of -5.4 mbbl but builds in Distillates (+2,5M) and Gasoline (+0,7 M). The US Energy department will release the Inventory Report later today and the expectations are as follows: Crude -0.3 mbbl, Distillates +0.6 mbbl, Gasoline -1.1 mbbl. This morning, crude is trading down.
 

Fueloil Specifics

The NWE fuel oil prices surged yesterday following strengthening Brent. Cargo prices gained app. $10/mt while delivered 380cst product in Rotterdam was even stronger, assessed up by nearly $13/mt. ARA hub reported increased demand levels as buyers were eager to fix before further rise in prices. Rotterdam port still reports some issues at loading installations especially for LSFO prompt deliveries. The Singapore fuel oil market prices rose more than +$9.25 during the morning Platts window yesterday tracking crude movement. The delivered bunker premiums slipped to around $7.25 above cargo prices yesterday as the higher outright prices and strengthening crude after the window dampened buying interest. This morning both markets are trading slightly higher.
 

Settlement & Indications (mid values)

Focus of the day: Singapore

Singapore onshore fuel oil stocks were at a three-week high as they jumped 12.5% to reach 19.811 million barrels, up from 17.607mbbl the week before. Part of the increase was due to arbitrage arrivals from Australia and the United States. Fuel oil traders warned, however, that a lack of on-specification material was likely to leave the marine fuel market short of product. A lack of high-density blending components is feeding expectations of tighter bunker fuel availability for August/September, point to continuing "firm prompt August/September time spreads" and a likely supply crunch. Bunker prices rose while supplies of bunker fuels were largely fine at key Asian ports on Tuesday. In Singapore, the price of 380cst grade rose $7 to $648.50/mt while marine gas oil (MGO) increased $13 to $944/mt. Demand was below average and avails were mostly fine. August 11 was the earliest date for bunker deliveries.
 

Economy fundamentals this week