Market in Brief

Crude Oil surged more than $3/bbl yesterday as markets are on hope-mode about economic stimulus. The August WTI futures closed at $87.66/bbl, +$3.91 and Brent at $100.68/bbl, +$3.34. This was coupled with positive US factory orders which rose +0.7% against a previous decline. Market sentiment improvements were reflected in the equities as well. Markets widely expect the ECB (European Central Bank) to cut interest rate by a quarter points tomorrow and are also looking for similar easing measures from US and China. Geopolitical risk premium is coming back in Oil price with Iran threat to block the Straits of Hormuz to some ships. The US inventories reported by API were bullish with draws across the crude and product stockpile. The US Energy Department inventory report will be delayed one day due to US public holiday today. This morning, crude is trading down.
 

Fueloil Specifics

The Northwest European fuel oil prices posted double digit gains yesterday following escalating Brent crude values. Delivered 380cst product was assessed up by app.$21/mt while cargo prices were even stronger, up by $24/mt. Demand in ARA hub was reported as relatively soft as majority of buyers held off the market expecting prices to weaken again. The Singapore fuel oil market prices extended its strength, rising more than $4.0 during the morning window yesterday as crude prices firmed. The bunker premiums were seen at app. $7.75- 8.75 above cargo prices yesterday as crude strengthened after the window. Bunker fuel oil swaps posted up to $25/mt gains at the front of the forward curve both for Rotterdam and Singapore papers. Backend was slightly weaker, up by app. $22.50/mt. This morning both markets are trading slightly down.
 

Settlement & Indications (mid values)

Focus of the day: Singapore

Singapore's onshore fuel oil stocks climbed to an 11-week high in the week rising by 1.389 million barrels to 20.631 million. The 7.2% increase came on the back of arbitrage arrivals from the Middle East. Volumes were 36% up week-on-week at 351,260mt. More than 81,620mt was product from Iran. There had been reports that Singapore was urging players operating in the city-state's energy markets to cut their dealings with Iran in a bid to avoid breaching western sanctions against the country. Meanwhile, fuel oil exports from Singapore were down 17% as demand from China, Indonesia and Vietnam weakened. Western arbitrage volumes to Singapore were falling, down by 76,848 mt to 526,749 mt. They were expected to continuing falling in the weeks ahead.
The price of 380cst grade rose $4 to $592.50/mt while marine gas oil (MGO) gained $8 to $846 pmt.
Demand was average and supplies were fine. July 10 was the earliest date for bunker deliveries.
 

Economy fundamentals this week