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 flat price action was lackluster yesterday as compared to Friday’s session. There was however a small rebound to recover some losses when the US opened on little or no news. Crude structure gave up gains with the main losers in the prompt spreads. Technically, WTI has failed to break above the multi-year downtrend line from April 2011 and that may indicate a near-term top formation with risk towards the downside. On the other hand, Brent only just broke out of its $100-105/bbl trading range a few days ago and near-term resistance is at its 200day MA @ $108.56/bbl. Given that WTI structure and WTI/Brent arb has rallied hard in the last few session, any consolidation move from here could see Brent a better long bet from a technical and positioning perspective. Key events this week will be EIA DOE Stats tomorrow- for which expectations are for draws at Cushing that could help support WTI- and the FOMC minutes. This morning crude is trading slightly down.

Fueloil Specifics

The Northwest European bunker fuel oil markets started the week with slightly firming prices. Delivered 380cst product in Rotterdam and Antwerp was assessed $2-3/mt higher versus previous close. There were reported tight prompt product avails in Rotterdam, especially for hsfo. Singapore HSFO180 was assessed app. $6.0/mt higher, while HSFO380 price rose $5.16/mt from last Friday. Prices of 380cst marine bunkers on Asian ports slumped since H2 Jun as most of the arbitrage cargoes were believed to be of the 380cst specification.  Lately weak marine fuel demand has prevented bunker prices from rising competitively in line with rising crude prices reflected on weaker cracks. Flat price market this morning showed Bal Jul 180 value 604.50, which indicate fuel oil will be continue trading on a weak note going forward. This morning both markets are trading down.

Settlement & Indications (mid values)

Product Yesterday's Values Forward Indications Product Change Last Dir. Aug Sep Oct Q413 Q114 2014 NYMEX WTI Swap (1st month) (0,08) 103,14 ↓ 102,57 101,32 99,94 98,63 95,69 93,19 ICE Brent Swap (1st month) (0,29) 107,43 ↓ 106,18 105,56 105,02 104,52 102,99 100,70 ICE Gasoil Swap (1st month) 1,50 913,25 ↓ 906,83 905,75 902,83 900,94 892,19 877,70 3.5% Barges FOB Rtdm 2,25 592,75 ↓ 584,25 580,50 579,50 576,25 574,50 566,50 3.5% Cargoes FOB Med 0,75 585,25 ↓ 578,50 575,25 572,75 570,00 568,00 563,00 1.0% Cargoes FOB NWE 3,00 599,75 ↓ 603,25 605,25 604,75 603,25 602,50 593,25 3% no. 6 USGC WB (0,05) 90,77 ↓ 90,75 90,75 90,50 90,25 90,00 89,00 380 CST Cargoes FOB S'pore 5,25 596,25 ↓ 599,00 601,00 601,25 600,00 597,50 591,25 0.1 % GO Barges FOB Rtdm 2,25 915,00 ↓ 908,25 907,25 904,25 902,25 895,25 879,25 Physical Rotterdam 380 CST 3,00 597,00 ↓ 589,50 585,75 583,25 581,50 579,75 571,75 Physical Singapore 380 CST 5,50 602,75 ↓ 604,25 605,25 605,50 604,75 601,75 595,50

Focus of the day: ARA

The first week of July was an interesting one. The ARA seemed to be almost unaffected by geopolitical unrest in the Suez-area. Where macro-indicator Brent was reaching for the stars, an ever weakening crack provided a huge cushion for Rotterdam fuel. This month no signals of a squeeze are being played. It might also be because of very low demand. So despite high flat price, it can still be seen as a buyer’s market. Whereas high sulphur fuel moved only slowly up, low sulphur seems to have come to a halt, losing a staggering 8 dollars worth of premium in just three days. The big discounts as seen last week, where to a lesser extend part of this week’s play. Still fair levels can be acquired; no signals or warning that it is to change on the short term. Notification periods for the different grades; five days for high sulphur enquiries and three working days for low sulphur enquiries.

Economy fundamentals this week

Fundamental Indicators Statistic Importance Date Time Period Consensus Last Actual Consumer Credit Medium 8-Jul 3:00 PM May $10.5B $11.1B $19.6B Wholesale Intentories Medium 10-Jul 10:00 AM May 0.4% 0.2% - FOMC Minutes High 10-Jul 2:00 PM 16-jun - - - Initial Claims Medium 11-Jul 8:30 AM 06-jul 345K 343K - Continuing Claims Medium 11-Jul 8:30 AM 29-jun 2950K 2933K - Treasury Budget Medium 11-Jul 2:00 PM Jun NA -$59.7B - Core PPI Medium 12-Jul 8:30 AM Jun 0.1% 0.1% - Mich Sentiment High 12-Jul 9:55 AM Jul 85.5 84.1 -

Source: OW Risk Management