Market in Brief

The Spanish "bail-out effect" did not last long, crude oil lost all the gains from the day before. The market is still highly skeptical as it seems to be only a short term fix. This came after the Saudi Arabian Oil Minister hinted that OPEC may need a higher output target despite the recent softer crude prices. The July WTI contract closed at $82.70/bbl, -$1.40 and Brent fell -$1.47 to $98.00/bbl. Market, this week, is likely to continue to be driven by developments in the Eurozone.
Today we will look at the US import price index and the monthly budget statement as well as API Weekly Inventories from the US later in the day. Tomorrow, we will see the release of the IEA monthly short term outlook and also the OPEC meeting on Thursday. This morning, crude is trading lower.
 

Fueloil Specifics

The Northwest European bunker fuel prices started the week with gains. Cargo prices were up app. $4/mt while delivered 380cst product in Rotterdam gained double supported by continuous tight product avails.. Higher fuel oil prices resulted in increased buying interest with both Rotterdam and Hamburg reporting busy morning. The Singapore fuel oil markets rose more than $21.5 during the morning Platts window yesterday tracking the strong crude movement. Although the near term supplies looked ample, fundamentals look to be strengthening forward. The delivered bunker premiums were lower at around $6.75 above cargo prices yesterday. Bunker fuel oil swaps gained up to $9/mt at the front both for Singapore and Rotterdam papers. Prices at the backend of the forward curve were slightly weaker adding a few dollars to the backwardated structure. This morning both markets are trading lower.
 

Settlement & Indications (mid values)

Focus of the day: ARA

ARA is slowly returning back to normal after a few tough months with very tight availability on both 3.5% and 1%. At this stage the availability for 380cst in general looks a lot better than previous months however the shortness of 500cst from May appears to continue in June. As many ships changed to 500cst in 2012 the market still seem to try to find a way to cope with the demand. After speaking to a few suppliers it is clear that there is not enough oil to fulfill their commitments. On the positive note, the lower oil prices appear to give extra room to work seen from a supplier perspective. This as well as the lack of demand due to purchasers waiting for a lower market, should ease tension in the ARA market in the coming month.
 

Economy fundamentals this week