Market in Brief

Crude Oil started the day positively looking forward to the Federal Reserve minutes. August WTI contract closed up +$1.90 to $85.81/bbl and Brent futures settlement gained +$2.26 to $100.23/bbl yesterday. The end of the oil workers' strike in Norway and also a pretty neutral overall US inventory report were largely ignored by the market. The Weekly Crude Inventory saw a massive draw but was counter balanced by larger than expected builds in the products stockpiles. Crude Oil kept its gains despite a kneejerk reaction after the Fed comments showed that the Board was split on adding further stimulus.. The Chinese 2Q GDP expanded at +7.7% as compared to the 8.1% from the previous quarter showing a much anticipated slowdown in the Chinese economy. This morning, crude is trading -0,7% down.
 

Fueloil Specifics

Bunker fuel prices lost a dollar in the NWE yesterday despite a strength seen in crude futures. Cargo prices were down by approx. $0.75/mt in Rotterdam while delivered 380cst product lost a few cents more. Both cargo and bunker prices are affected by a plentiful supply both from the FSU countries and North European sources while demand remains soft and arbitrage is closed yet. Mediterranean market continues looking slightly stronger in comparison. LSFO avails remain an issue across the markets though it is expected to improve. The Singapore fuel oil markets prices rose by $0.5 - 1.5/mt during the local Platts window. The July incoming cargoes are estimated to be 2.8 to 2.9 million mt. The delivered bunker premiums were higher at $8.50 above cargo prices yesterday as crude strengthen after the window. Bunker fuel swaps gained a few cents in the front while loosing a little at the back of the curve; somehow unusual behaviour not seen recently. As a result of the change in the curve the backwardation discount increased by a dollar roughly from the front to 2013 papers. Singapore papers were marginally stronger in the front. Both markets are trading a dollar higher this morning.
 

Settlement & Indications (mid values)

Today's fact box

Demand for the 1% grade of low sulfur bunker fuel in the Singapore market had seen an increase of about 20% from June to July, several market sources said Thursday. The market typically sees about 30,000 mt of demand per month. The increase in demand is likely to be due to the upcoming implementation of the North American Emissions Control Area, trading sources said. Vessels are bunkering in Singapore before heading towards the US, they said. The regulation stipulates that ships are to burn a maximum of 1% sulfur bunker fuel while they are within the area. The ECA extends 200 nautical miles off the US Pacific coast, the Atlantic/Gulf coast, the eight main Hawaiian Islands, Canada and the French territories.
 

Economy fundamentals this week

Technical indicators

Technical picture remains largely unchanged for the last few days. Both crudes gained a little and managed to close above their s/t MAs. GO did not break above MA5 yesterday though it posted a marginal gain as well. All the three contracts we watch are drifting lower this morning and both crudes slid below MA5 again. Markets lack a strong momentum and remain indecisive. Our view remains unchanged: we maintain a positive view though expect a drift towards MA34 prior to the next advance. The support from MA34s shall hold as a convincing violation would change the view to more neutral. EUR/USD remains negative having made a new low yesterday. However, a forming RSI divergence remains intact. This is probably the only positive sign on the EUR/USD chart.