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By the Oil Desk at Freight Investor Services Ltd.

Brent closed up $1.69 on Friday to $52.72 and WTI closed at $48.51, up $1.42. Well, that was an interesting end to what was a fairly flat week, wasn't it? A 3% rally. 'And on the back of what?' I hear you cry. Well, I'm assuming it can only be that the US rig count fell by 5 last week, the most since January. But I am struggling to understand why a paltry drop of just 5 rigs yielded such a strong rally. Let's be honest, all other indicators right now are not particularly encouraging for oil to rise much above these kind of levels; for example, recently, OPEC compliance has faltered by 142,000 barrels, but exempt nations Iran, Libya and Nigeria have added 721,000 to their October 2016 production levels. That is a whopping 863,000 barrels above the plan. In the same time frame, US crude production in the lower 48 states has increased 1.101 million barrels. So just those two factors are enough to nullify the OPEC cuts. Methinks the US are easily on course for 10mbpd of production by sometime end Q4 2017. I don't care how you count them or what fancy spreadsheet you are running, trust me there is a lot of oil being produced and it doesn't seem like it is stopping any time soon. So five rigs down and the sentiment has turned bullish? Nah, don't agree. I fear the next two weeks are critical for the oil market to stay above $50. People who bought into Friday's rally will want reassurance that demand is there to keep Brent at these kind of levels, and I fear that with US refining margins being so high, unless some evidence is forthcoming that the population are actually buying the products being produced, then the market will fall quicker than Huddersfield Town over the next few weeks.

Economic Data/Events: (UK times)

* 12pm: ICE weekly commitments of traders report for Brent,gasoil

* 1:30pm: Bloomberg forecast of U.S. waterborne LPG exports

* 1:30pm: Chicago Fed activity index for July, est. 0.10 (prior0.13)

** Bloomberg proprietary forecast of Cushing crude inventory change plus weekly analyst survey of crude, gasoline, distillates inventories before Wednesday EIA report

** OPEC, non-OPEC Joint Technical Committee meets in Vienna to ssess compliance with production cuts

** Russia 10-day Urals program for Sept.

** U.S. updates El Nino/La Nina monthly forecast

** Iraqi loading programs for September

Singapore 380 cSt

Sep17 - 305.50 / 307.50

Oct17 - 304.75 / 306.75

Nov17 - 303.75 / 305.75

Dec17 - 302.75 / 304.75

Jan18 - 301.75 / 303.75

Feb18 - 301.00 / 303.00

Q4-17 - 303.75 / 305.75

Q1-18 - 301.25 / 303.25

Q2-18 - 299.75 / 302.25

Q3-18 - 298.75 / 301.25

CAL18 - 298.75 / 302.25

CAL19 - 292.75 / 297.75

CAL20 - 275.00 / 282.00

Singapore 180 cSt

Sep17 - 310.25 / 312.25

Oct17 - 310.00 / 312.00

Nov17 - 309.25 / 311.25

Dec17 - 308.50 / 310.50

Jan18 - 308.50 / 310.50

Feb18 - 308.00 / 310.00

Q4-17 - 309.25 / 311.25

Q1-18 - 308.00 / 310.00

Q2-18 - 307.00 / 309.50

Q3-18 - 306.25 / 308.75

CAL18 - 306.00 / 309.50

CAL19 - 301.50 / 306.50

CAL20 - 284.00 / 291.00

Rotterdam 380 cSt

Sep17 292.50 / 294.50

Oct17 289.50 / 291.50

Nov17 286.50 / 288.50

Dec17 284.25 / 286.25

Jan18 285.00 / 287.00

Feb18 285.00 / 287.00

Q4-17 286.75 / 288.75

Q1-18 285.25 / 287.25

Q2-18 284.75 / 287.25

Q3-18 284.50 / 287.00

CAL18 283.00 / 286.50

CAL19 273.75 / 278.75

CAL20 255.75 / 262.75

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Founded in 2002, Freight Investor Services is a specialist in dry bulk and commodity derivatives, including cargo freight, iron ore, fertilizer and bunker fuel. The company has offices in London, Dubai, Singapore and Shanghai.

For further details about fuel oil swaps or to discuss trading opportunities, please contact Andrew Cullen, Client Relations & Development Manager, on +44 207 090 1126, or email AndrewC@freightinvestor.com.