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Fuel oil trend

Rotterdam: $ 6 lower. Singapore: $ 4 lower. US Gulf: $ 0 higher.

Official oil inventories showed semi-big draw (Brent: $111.50)

Yesterday morning prices appeared to have increased due to the massive draw on crude (12mbbl) showed by the private API figures. Although the afternoons official EIA figures showed a draw as well, it was less dramatic (approx 5.5mbbl) than the API projections. Refinery runs were up an impressive 3% which bring total refinery utilization to a multiyear high – seasonally adjusted. The increase in runs looks to be highly needed as distillate inventories (including heating oil for the winter) are at a multiyear low. If the winter should prove to be colder than usual, it would have had a dramatic effect on heating oil/diesel prices.

OPEC meeting update

Much to the surprise of – well not that many really – OPEC decided on its last get-together of the year to keep production targets unchanged at 30mbpd. Further news out of the Vienna based meeting: Libya has high hopes for its output and expect production to be back online within 10 days…. even MacGyver with access to a fully equipped Home Depot would have a hard time meeting that timeline. Iran has named 7 oil companies it would like to invite back to help bring production back online. They certainly do not waste any time in trying to get the oil revenue back to pre-sanction levels.

Recommendation

We are heading towards year-end and traders will likely start reducing positions - as they do every year. Lower liquidity is expected to set in over the next few weeks, and potential outliers in prices could emerge as a result (as it takes relatively smaller orders to impact market direction). Costumers are advised to take advantage of these outliers, as the market usually returns to "normal" shortly into the New Year.