---

Commentary

Brent closed up $0.74 last night to $72.90 and WTI closed at $68.76, up $0.68. Brent spent much of the day dragging it's knuckles until EIA showed a gasoline draw, finally. We rallied up to $73 from being down to $71.20 earlier in the day. However, don't let these number deceive you, my oily chums. Crude showed a build, which was surprising considering the pipeline from Canada is still down, refinery runs were down and, more importantly, US oil production hit 11mn bpd. That's more than Saudi, and a mozzie's whisker away from Russia. In January of this year I said the following regarding US oil production. "End 2018 it is going to be 11mn bpd". I thought I was being fairly bullish by saying end 2018 but they've actually gone and done it in 6 months! That is a staggering production increase of 30% in 2 years. How long has Trump been President? Hmmm. If the U.S. can now sort it transportation capacity bottleneck, it will be teetering on being the world's largest oil producer - at the current rate of growth - in just over a year. The crude market looks like it is in for a correction over the next few weeks. The Summer of discontent? The only fly in the ointment is that Midland vs WTI futures is trading around -8.30 for Cal 19. I read a piece this morning by Mr Ed Bell that the Dallas Fed reckon that the breakeven for Permian is $53 bucks. So it's kind of on the edge right now for Cal 19. Let's see. In other news, fuel oil continues its resolute strength. The crack may not have moved on the big dumps in crude price we had the other day, but you are going to see it react in the next few weeks as supplies continue to dwindle. Fuel oil inventories are nigh on at a record low, but you don't see any data about that moving the market, do you? Residual or not, perhaps it is time to look at the bottom of the tower instead of constantly looking up and shouting "Rapunzel, Rapunzel, show me your driving season stats?" #welovefueloilthemost. Keep your eye on cable and the Brent spreads. Good day.

Fuel Oil Market (Jul 18)

The front crack opened at -8.60, weakening to -8.70, before strengthening to -8.55. The Cal 19 was valued at -15.35

The front-month fuel oil crack widened its discount to Brent crude on Wednesday, slipping further away from recent highs despite sharp declines in crude oil prices over the past week.

While fuel oil crack discounts typically narrow as crude prices weaken, industry participants said the weaker crack values this week could be a result of profit-taking after weeks of active trade. Industry participants also said the wider crack discount could be sign of gradually increasing fuel oil output after months of shrinking fuel oil inventories across key storage hubs

Fuel oil inventories at the Fujairah slipped 1.2 percent, or 121,000 barrels (about 18,000 tonnes), to a two-week low of 9.779 million barrels (1.46 million tonnes) in the week ended July 16.

Economic data/events (Times are London.)

* 1:30pm: Philadelphia Fed Business Outlook, July

* 1:30pm: U.S. Initial Jobless Claims, July 14

* 1:30pm: U.S. Continuing Claims, July 7

* 2:45pm: Bloomberg Consumer Comfort, July 15

* 2:45pm: Bloomberg Economic Expectations, July

* Singapore onshore oil-product stockpile data

* Russian refining maintenance schedule from ministry

* API's Monthly Statistical Report

Singapore 380 cSt

Aug18 - 427.75 / 429.75

Sep18 - 419.75 / 421.75

Oct18 - 414.50 / 416.50

Nov18 - 411.00 / 413.00

Dec18 - 407.75 / 409.75

Jan19 - 404.50 / 406.50

Q4-18 - 411.25 / 413.25

Q1-19 - 402.00 / 404.00

Q2-19 - 392.25 / 394.75

Q3-19 - 366.50 / 369.00

CAL19 - 372.50 / 375.50

CAL20 - 298.25 / 304.25

Singapore 180 cSt

Aug18 - 436.25 / 438.25

Sep18 - 429.00 / 431.00

Oct18 - 424.50 / 426.50

Nov18 - 421.25 / 423.25

Dec18 - 418.25 / 420.25

Jan19 - 415.25 / 417.25

Q4-18 - 421.50 / 423.50

Q1-19 - 412.75 / 414.75

Q2-19 - 404.00 / 406.50

Q3-19 - 382.00 / 384.50

CAL19 - 387.00 / 390.00

CAL20 - 321.50 / 327.50

Rotterdam 3.5%

Aug18 - 405.75 / 407.75

Sep18 - 400.25 / 402.25

Oct18 - 396.00 / 398.00

Nov18 - 392.00 / 394.00

Dec18 - 388.50 / 390.50

Jan19 - 386.25 / 388.25

Q4-18 - 392.25 / 394.25

Q1-19 - 383.50 / 385.50

Q2-19 - 372.75 / 375.25

Q3-19 - 347.50 / 350.00

CAL19 - 350.00 / 353.00

CAL20 - 285.75 / 291.75