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 rose yesterday, again on positive US economic data and tighter supplies from the North Sea. WTI raised $0.46 to settle at $97.84/bbl. while Brent closed $0.94 higher  at $107.19/bbl. Yesterday macro news where few, ECB announcement that it would leave its main interest rate unchanged was expected. Oil news, the four North Sea benchmark crudes that underpin the Brent oil futures are set to load fewer barrels in March which means tighter supply. Saudi Arabia decided to cut the official selling price (OSP) to a premium of $1.75/bbl. over Oman/Dubai, down from $2.45 in Feb14 and lowest since July last year. This move will be welcomed by Asian refineries, but it looks like demand in Asia will disappoint given slower economic growth as forecasted by many banks, worries over capital flight from emerging markets and weaker currencies in the region as seen lately, why it is likely to see Saudi’s to cut (OSP) again to avoid demand destruction in Asia and keep market share. Traders today will look ahead to the US Nonfarm Payrolls report from US. This morning WTI is down -0,38% while Brent is up +0,15%.

Fueloil Specifics

The NWE bunker fuel oil prices strengthened significantly following rising Brent values. Delivered 380cst product both in Antwerp and Rotterdam was assessed nearly $6/mt higher while suppliers reported relatively quiet day. Cash premiums of both 180-cst and 380-cst fuel oil fell to a two-week low on Thursday as supplies grow on an influx of barrels into Asia. The 180-cst and 380-cst cash premiums to Singapore spot quotes were at $2.91/mt and $4.86/mt on Thursday, respectively, both down about $1.40/mt from the day before. Prices were pressured by strong selling interest from major traders Glencore and Mercuria with offers as low as $4.50/mt for the 380cst grade and $3/mt for the 180cst grade. Still, traders are expecting some further softening in the market as western supplies for arrival into Asia from late February onwards are growing. Estimates for arbitrage volumes for February arrival have risen from an initial 2.8 million tonnes to about 3.2 million tonnes. This was due to lower freight rates in the West for very large crude carriers and Suezmaxes, enabling traders to move excess cargoes eastwards. In line with market sentiment, Singapore's onshore fuel oil stocks surged 2.332 million barrels (367,000 tonnes) to a three-week high of 19.202 million barrels (3.02 million tonnes) in the week to Feb. 5, latest data from trade agency IE Singapore showed. Delivered bunker 380cst where seen in a range around 598/mt-605/mt depending on quantity and vessel. Paper 380CF where seen soft in Europe hours and time-spreads in the front came off significantly together with weak Dubai FO cracks. E/W got hammered again today and the front Feb14 closed at 32.75 down from 36.50 the day before close. This morning both markets are trading higher.

Settlement & Indications (mid values)

Product Yesterday's Values   Forward Indications Product Change Last Dir. Mar Apr May Q214 Q314 Q414 NYMEX WTI Swap (1st month) 0,46 97,84 ↓ 96,69 96,02 95,45 95,43 93,16 91,05 ICE Brent Swap (1st month) 0,94 107,19 ↑ 106,42 106,04 106,04 105,67 104,37 102,91 ICE Gasoil Swap (1st month) 7,25 906,25 ↑ 904,50 901,33 899,25 899,61 895,83 890,42 3.5% Barges FOB Rtdm 6,75 572,50 ↑ 573,75 573,25 572,75 572,75 571,00 567,50 3.5% Cargoes FOB Med 6,75 575,75 ↑ 572,25 571,00 570,50 570,50 568,50 564,75 1.0% Cargoes FOB NWE 9,00 609,25 ↑ 602,00 599,75 598,25 598,25 595,00 588,75 3% no. 6 USGC WB 1,05 90,00 ↑ 89,95 90,15 90,23 89,82 89,40 89,47 380 CST Cargoes FOB S'pore (4,75) 598,75 ↑ 597,25 595,75 595,25 595,50 593,75 592,00 0.1 % GO Barges FOB Rtdm 7,25 905,50 ↑ 906,25 902,25 899,25 900,25 895,25 890,25 Physical Rotterdam 380 CST 6,00 572,00 ↑ 579,00 578,50 578,00 578,00 576,25 572,75 Physical Singapore 380 CST (5,00) 612,50 ↑ 602,50 601,00 600,50 600,75 599,00 597,25

Focus of the day: Piraeus

It was a quiet and uneventful week in the East Med, with demand initially slumping along with the crude market. The drop in prices in the beginning of the week was offset by an upward move the last couple of days and buyers brought a number of large enquiries in the markets of Piraeus and Istanbul. Product availability is very good in both major ports and suppliers are able to offer for prompt supplies during the weekend. We expect increased demand for the next week, as the market is still bullish and cargo prices are expected to rise. On the supply side, premiums in Istanbul have dropped significantly in the last couple of weeks and HSFO prices are now very close to the levels seen in Piraeus, with the spread having narrowed down to less than $10.

Economy fundamentals this week

Fundamental Indicators Statistic Importance Date Time Period Consensus Last Actual ISM Index High 3-Feb 10:00 AM Jan 57.0 56.5 51.3 Factory Orders Medium 4-Feb 10:00 AM Dec -2.0% 1.8% -1.5% ADP Employment Change Medium 5-Feb 8:15 AM Jan 175K 238K 175K ISM Services Medium 5-Feb 10:00 AM Jan 53.5 53.8 54.0 Initial Claims Medium 6-Feb 8:30 AM 01-feb 330K 348K 331K Trade Balance Medium 6-Feb 8:30 AM Dec -$37.0B -$34.3B -$38.7B Nonfarm Payrolls High 7-Feb 8:30 AM Jan 150K 74K - Unemployment Rate High 7-Feb 8:30 AM Jan 6.5% 6.7% -

Source: OW Risk Management