---

Fuel oil trend

Rotterdam: $ 6 higher. Singapore: $ 1 higher. US Gulf: $ 5 higher.

Oil price in range trading (Brent: $109.7)

Yesterday’s weekly EIA oil inventory report showed a larger-than-expected build in crude oil (6.8 mio. barrels versus 1.5 expected) and draw in distillates (-3.1 versus -1.2 expected). The weekly report from the EIA will not be published next week unless the U.S. debt issue is resolved since the EIA is part of the U.S. Department of Energy.

News of the large build in crude oil stocks made oil prices drop yesterday, but prices are up again this morning as another piece of news was published: the Libyan Prime Minister, Ali Zeidan, was kidnapped. Risk premium is up on fears of oil supply disruptions are increasing. The country's oil production is approx. 700,000 bpd.

Minutes of Meeting from the FOMC (federal reserve) showed that the decision to postpone tapering of the Quantitative Easing was a relatively "close call". With the current political circus, we maintain our view that tapering will not happen before December or earlier 2014. Bernanke’s term officially ends by the end of January 2014. Delayed tapering would be supportive of oil prices.

Recommendation

With a lot of highly price sensitive action going on: FED surprising, Libya – unrest increasing? Syria – how will the plan to remove the chemical weapons proceed? Iran – nuclear program and negotiations, shale oil – output reached a plateau? Uncertainty on U.S. budget, which is likely to make prices rebound when resolved. We advise clients to check their medium and long term oil price risk levels, and strongly consider partly hedging