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Fuel oil trend

Rotterdam: $ 2 lower. Singapore: $ 5 lower. US Gulf: trading unchanged.

Technical trading (Brent: $108.0)

Yesterday’s oil trading activity saw a lot of action (especially on the downside) without any real oil news hitting the headlines. We are now in the bottom of the range we mentioned this Monday. The 106-108 range should act as massive support. A daily close above 110 would be a strong signal for further upward moves, whereas a daily close below 106 would signal further weakness.

Owners of the Scottish 210,000bpd Grangemouth refinery and Unite (UK’s biggest union) initially clashed on labour disputes. Negotiations to ensure the survival of the refinery and jobs however seem to be heading in the right direction. If the matters are resolved, production is assumed to return at a rapid pace.

Later today (14:30 CET) the initial U.S. jobless claims will be published. From a fundamental point of view the figures should not have a great impact, but one thing is fundamentals, another is the market reaction. Given the massive increase in volatility around the published non-farm payrolls earlier this week, we cannot rule out a repeated increase in volatility.

Recommendation

The U.S. political stand-off should ultimately result in prolonged QE. Libyan oil output continues to yo-yo. Negotiations on Irans nuclear program are highly likely to produce a whole lot of nothing. Market dips should be used by consumers to secure hedged (should it suit your budget). We see potential year-end spikes in equity and oil prices.