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 prices jumped during the US session after the  November US ISM Manufacturing data came out much stronger at 57,3 vs 55,1 expected, the highest level since April 2011. This follows the earlier positive Chinese November Manufacturing number which also reached an 18 month high. Brent Crude prices jumped $3 after the news to come down $1 towards the close. WTI oil contract rose for a third day amid forecast stockpiles dropped last week for the first time since September in the US. OPEC will meet tomorrow to discuss their production target while the market largely expects them to keep the volume unchanged at least for the first half of next year if prices stay around 100 usd for Brent. The January WTI contract gained +$1.10 to close at $93.82/bbl and Brent up +$1.76 at $111.45/bbl. This morning China Services PMI gauge fell for November to 56 from 56,3. This morning, crude prices are trading mixed with Brent down -0,1% and WTI up by 0,15%.

Fueloil Specifics

The NWE bunker fuel oil prices fell slightly at the beginning of the week. Delivered 380cst product in Rotterdam lost nearly $3/mt and only app.$1/mt in Antwerp. Suppliers reported improved hsfo avails in Rotterdam while lsfo market remained tight. The Singapore fuel oil market fell app. $1.50 during the Asian Platts window yesterday. Bunker demand was heard to be slow while the delivered bunker premiums were app. $7.0-6.5 above cargo prices. This morning both markets are trading higher.

Settlement & Indications (mid values)

Product Yesterday's Values   Forward Indications Product Change Last Dir. Jan Feb Mar Q114 Q214 2014 NYMEX WTI Swap (1st month) 1,10 93,82 ↑ 94,27 94,30 94,22 94,26 93,66 92,85 ICE Brent Swap (1st month) 1,76 111,45 ↓ 110,82 110,42 110,45 110,14 109,61 108,84 ICE Gasoil Swap (1st month) 0,25 942,75 ↑ 944,25 942,67 940,00 942,31 932,00 931,49 3.5% Barges FOB Rtdm 3,50 578,00 ↑ 583,00 585,00 586,50 584,75 588,25 587,75 3.5% Cargoes FOB Med (1,25) 574,50 ↑ 579,00 581,25 582,75 581,00 584,50 587,75 1.0% Cargoes FOB NWE 5,75 623,50 ↑ 615,75 615,75 616,00 615,75 617,00 615,75 3% no. 6 USGC WB 1,42 91,97 ↓ 91,25 91,50 91,50 91,50 91,75 91,75 380 CST Cargoes FOB S'pore (1,25) 604,75 ↑ 604,50 604,00 604,25 604,25 606,50 607,25 0.1 % GO Barges FOB Rtdm (0,50) 942,25 ↑ 945,25 944,25 941,25 943,25 935,25 933,25 Physical Rotterdam 380 CST (1,00) 580,25 ↑ 588,25 590,25 591,75 590,00 593,50 593,00 Physical Singapore 380 CST (0,50) 610,50 ↑ 609,75 609,25 609,50 609,50 611,75 612,50

Focus of the day: ARA

The end of the month didn’t have too many surprises up its sleeve, but for low sulphur being traded at exceptionally high levels. The crude has been moving in a 4 dollar range. Worth mentioning is the front spread on the high sulphur going into contango. Hence we see a reason for the crack to remain weak. This should result in less pressure for the suppliers to sell their product thus higher premiums also for deliveries a little bit further out. This has spared buyers a bit from the rise on the crude. Higher premiums yes, but prompt relatively cheap and avails look good. We did expect the low sulphur to take a flight, however that it would be jet-propelled was not in the direct line of expectations. It was November’s last trick before going into December. The hilo is over 50 USD at the moment. Add to that at least 8 dollars for delivered product and it’s safe to say that low sulphur has become expensive. With more batches being off-spec and queuing becoming the motto we don’t see any relief in this soon. However, the premium being backwardated should indicate this is anything but permanent and one would expect the New Year’s resolution is to go back to less nervous levels. Gasoil is still plenty and cheap. Notification periods for the different grades; four days for high sulphur enquiries and six working days for low sulphur enquiries.

Economy fundamentals this week

Fundamental Indicators Statistic Importance Date Time Period Consensus Last Actual ISM Index High 2-Dec 10:00 AM Nov 55.0 56.4 57.3 Construction Spending Medium 2-Dec 10:00 AM Oct 0.3% -0.3% 0.8% ADP Employment Change Medium 4-Dec 8:15 AM Nov 175K 130K - Trade Balance Medium 4-Dec 8:30 AM Oct -$40.5B -$41.8B - New Home Sales Medium 4-Dec 10:00 AM Oct 410K NA - ISM Services Medium 4-Dec 10:00 AM Nov 55.0 55.4 - Initial Claims Medium 5-Dec 8:30 AM 30-nov 335K 316K - GDP- 2nd Estimate High 5-Dec 8:30 AM Q3 3.1% 2.8% - Factory Orders Medium 5-Dec 10:00 AM Oct -1.0% 1.7% - Nonfarm Payrolls High 6-Dec 8:30 AM Nov 185K 204K - Unemployment Rate High 6-Dec 8:30 AM Nov 7.2% 7.3% - PCE Prices- Core Medium 6-Dec 8:30 AM Oct 0.1% 0.1% - Mich Sentiment High 6-Dec 9:55 AM Dec 77.0 75.1 - Consumer Credit Medium 6-Dec 3:00 PM Oct $15.0B $13.7B -

Source: OW Risk Management