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

After a volatile session crude prices closed lower yesterday with November WTI futures settling at $91.25/bbl, down $1.14 while Brent slipped only $0.17 to $114.33/bbl. The market is still trading on stimulus hopes and the recent gains (+5% on three days) seem to be based more on financials than fundamentals. Euros and equities came off yesterday as Spanish bonds were downgraded two notches to a level just above junk status. IMF calls for action as Euro Zone crisis festers. The API inventory data showed crude and gasoline build of +1.65 mbbl and +2.47 mbbl respectively which was more than expected. However the distillates stockpile saw a massive draw of -6.20 mbbl. The inventory report by the US Energy Department will be released later today and expectations are as follows: Crude +0.78, Distillates -0.51, Gas +0.03. This morning, crude is trading up.

Fueloil Specifics

The Northwest European fuel oil markets posted double digit gains yesterday following rebound in Brent. Delivered 380cst product in Rotterdam was up by app.$14/mt while cargo prices were app.one dollar weaker. Demand levels in the area remained sluggish as buyers stayed away from the market. The Singapore fuel oil market surged up more than $20.0 yesterday during the Platts window. The Asian Fuel Oil cracks narrowed sharply yesterday on strong buying interest in fuel oil swaps. The delivered bunker premiums fell strongly to around $3.0-4.5 above cargo prices as the higher outright prices dampened buying. Bunker fuel oil swaps gained up to $13/mt at the front of the forward curve both for Rotterdam and Singapore papers. Backend was a few dollars weaker, posting app.$10/mt gains. This morning both markets are trading slightly down.

Settlement & Indications (mid values)

Product Yesterday's Values Forward Indications Product Change Last Dir. Nov Dec Jan Q113 Q213 2013 NYMEX WTI Swap (1st month) (1.14) 91.25 ↑ 92.36 92.85 93.30 93.52 93.91 92.38 ICE Brent Swap (1st month) (0.17) 114.33 ↑ 113.70 112.92 112.19 111.57 109.77 113.75 ICE Gasoil Swap (1st month) 23.50 1025.50 ↑ 998.83 987.42 978.17 970.56 953.33 950.73 3.5% Barges FOB Rtdm 13.00 628.50 ↓ 627.50 626.75 626.50 625.00 619.50 616.00 3.5% Cargoes FOB Med 10.00 626.50 ↓ 622.75 621.25 620.25 620.00 615.50 612.00 1.0% Cargoes FOB NWE 12.25 666.00 ↓ 663.00 661.75 661.25 659.75 653.75 650.25 3% no. 6 USGC WB 0.72 97.78 ↑ 98.41 98.16 97.83 97.83 96.98 96.53 380 CST Cargoes FOB S'pore 20.25 651.25 ↓ 650.75 650.25 649.75 648.25 643.25 639.50 0.1 % GO Barges FOB Rtdm 21.25 1021.75 ↑ 999.25 987.25 979.25 972.25 955.25 952.25 Physical Rotterdam 380 CST 14.00 634.25 ↓ 637.75 637.00 636.75 635.25 629.75 626.25 Physical Singapore 380 CST 17.00 655.25 ↓ 661.00 660.50 660.00 659.00 654.00 650.25

Focus of the day: Houston

GULF COAST: US Gulf Coast residual fuel oil climbed yesterday in correlation with the paper market ending the day with a quite active Platts MOC window and assessment for the USG3% of $98.275/bbl. Since Gulf Coast high sulfur paper is in a backwardated market by 30 cents, the front and middle windows need to be higher than the back windows. Platts assessed the back end at $98.25/b and drew the curve to assess the nine-day delivery window to $98.275/b. The spread between RMG 380 and Gulf Coast 3% narrowed 30 cents to plus $1.20/bbl. However, market prices we are seeing are around $1.90/bbl -2.00/bbl premium. Houston and New Orleans IFO 380 assessments tightened to near parity in the US Gulf Coast bunker fuel market on Wednesday. Indications were heard in Houston in the morning for IFO 380 flat to Tuesday in the upper $630s/mt through the lower $640s/mt, with low sulfur holding steady at $100/mt over IFO 380. Note OWB USA PC can offer and lock in premiums around $85-90/mt. Taking into account the late drop in crude, Houston IFO 380 opening levels today should be $642-6433/mt. Premiums between Houston and New Orleans have tightened from $8-12/mt last week to a $2-3/mt. However, New Orleans IFO 380 was assessed by Platts at $644-648/mt.

Economy fundamentals this week

Fundamental Indicators Statistic Importance Date Time Period Consensus Last Actual Wholesale Inventories Medium 10-Oct 10:00 AM Aug 0.5% 0.7% 0.5% Treasury Budget Medium 10-Oct 2:00 PM Sep NA -$62.8B - Initial Claims Medium 11-Oct 8:30 AM 06-Oct 375K 367K - Trade Balanace Medium 11-Oct 8:30 AM Aug -$44.6B -$42.0B - Core PPI High 12-Oct 8:30 AM Sep 0.1% 0.2% - Mich Sentiment High 12-Oct 9:55 AM Oct 80.0 78.3 -

Source: OW Risk Management