A bunker fuel and oil report, detailing the day per day trading patterns and prices in the market.The report is prepared from OW Risk Management and covers all major bunker fuel oil markets around the world, including all major ports, ranging from Singapore to Rotterdam.

Market in Brief

Crude Oil prices extended their weakness and fell more than 1.5% yesterday. The July WTI contract closed at $86.53/bbl down -$1.29 and Brent -$1.60 at $101.87. Market is under much pressure and the EuroUSD dropped to a 23 month low. This is a strong sign of risk aversion. The market is afraid of the worst outcome, a contagion to Spain for example.. The latest official Manufacturing Purchasing Managers Index (PMI) from China was disappointing, falling to 50.4 for May, close to contracting point below 50, revealing a slowdown in the manufacturing sector for the seventh straight months in a row. The DOE Weekly Inventory Report showed a big crude build of +2.2 mbbl while distillates show a big draw of -1.7 mbbl against expectation. Today in term of economic data, the US nonfarm payroll (+150k exp.) will be published, nevertheless the Market remains dominated by Eurozone news.This morning, crude is sharply lower after China’s PMI with Brent testing the $100 /bbl usd level.

Fueloil Specifics

Bunker fuel prices were down yet another day in a row yesterday. Prices of Rotterdam 380 cst delivered fuel lost approx.. $9/mt. Cargo prices were even weaker loosing a couple of dollars more. Bunker market in ARTA saw a degree of activity yesterday though many traders stay aside trying to wait for a consolidation of crude prices. The Singapore fuel oil markets plummeted by more than $11.0/mt during the Platts window yesterday. The Singapore heavy residual inventory saw a build of 1.5 mbbl to 20.36 mbbl. The delivered bunker premiums hovered around $7.50/mt above cargo prices. Front month bunker fuel swaps lost approx. $8.5/mt both in Rotterdam and Singapore yesterday. Prices were a notch stronger at the back of the curve shredding few dollars from the backwardated structure. 2013 and 2014 prices look quite attractive. Both markets look soft again this morning.

Settlement & Indications (mid values)

Product Yesterday's Values Forward Indications Product Change Last Dir. Jun Jul Aug Q312 Q412 2013 NYMEX WTI Swap (1st month) (1.29) 86.53 ↓ 85.15 85.47 85.78 85.78 86.71 86.71 ICE Brent Swap (1st month) (1.60) 101.87 ↓ 99.88 99.51 99.18 99.20 98.55 98.55 ICE Gasoil Swap (1st month) (11.75) 870.75 ↓ 857.17 855.25 855.33 855.42 856.22 852.38 3.5% Barges FOB Rtdm (0.25) 588.50 ↓ 577.25 572.75 570.00 570.00 562.25 551.25 3.5% Cargoes FOB Med (0.25) 592.25 ↓ 574.50 568.50 565.50 565.50 557.75 546.50 1.0% Cargoes FOB NWE (1.00) 657.50 ↓ 613.00 610.50 607.50 607.25 596.00 584.50 3% no. 6 USGC WB (1.50) 91.85 ↓ 91.25 90.80 90.45 89.45 88.65 87.58 380 CST Cargoes FOB S'pore (11.00) 625.25 ↓ 605.50 600.50 597.75 598.75 590.25 577.50 0.1 % GO Barges FOB Rtdm (10.25) 872.00 ↓ 857.25 856.25 855.25 856.25 855.25 852.25 Physical Rotterdam 380 CST (9.00) 598.25 ↓ 587.50 583.00 580.25 580.25 572.50 561.50 Physical Singapore 380 CST (10.00) 633.00 ↓ 615.75 610.75 608.00 609.50 601.00 588.25

Focus of the day: Piraeus

This week demand in Piraeus was still a bit lower than expected for this time of the year, mostly because of the crude market dropping significantly, which made buyers reluctant to commit themselves for large volumes. Market activity was a bit subdued in the rest of the East Med as well, however as cruise vessel traffic is high and Malta is still tight on HSFO, some barge tightness has been reported in Piraeus over the last few days. All refineries are online, supplies have been carried out smoothly and prices have been very competitive; HSFO 380 was cheaper in Piraeus this week by $ 3.00, $ 7.00 and $ 26.00 compared to Malta, Gibraltar and Istanbul respectively.

Economy fundamentals this week

Fundamental Indicators Statistic Importance Date Time Period Consensus Last Actual Consumer Confidence Medium 29-May 10:00 AM May 71 69.2 64.9 Initial Claims Medium 31-May 8:30 AM 26-May 365K 370K 383K GDP High 31-May 8:30 AM Q1 1.9% 2.2% 1.9% Chicagp PMI Medium 31-May 9:45 AM May 55.0 56.2 52.7 Nonfarm Payroll Medium 01-Jun 8:30 AM May 175K 115K - Construction Spending Medium 01-Jun 10:00 AM Apr 0.0% 0.1% - Auto Sales Low 01-Jun 2:00 PM May NA 5.0M -

Technical indicators

Daily Charts Resistance Brent WTI GO Near 103.90 88.20 886.30 Next 104.80 88.70 893.60 Strong 106.30 89.20 802.80 Support Brent WTI GO Near 100.00 84.30 861.90 Next 99.10 83.20 849.25 Strong 98.75 83.20 826.05       It’s difficult to be positive when the market behaves in the current manner. Energy futures lost again yesterday and look soft this morning. However, indicators are not supportive for the move further down: RSI divergence remains in place on virtually all contracts we watch as well as EUR/USD chart. S/t MA are very far away and stochastic does not support the price action as well. Technically the contracts should not be moving much lower. However, the market is extremely nervous and a strong move cannot be ruled out.

Source: OW Risk Management