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By the Oil Desk at Freight Investor Services Ltd.

Commentary

Brent closed up $1.20 last night to $57.00 and WTI closed at $50.79, up $ 0.81. What has the week brought us? It's been a pretty subdued week, well at least up until yesterday. Brent is down about 1% on the week but it would have been a lot worse if the Saudi King hadn't gone to visit Vlad yesterday at the Kremlin. Once again this market pins its hopes on the back of (what I had already assumed was priced in) an extension to the OPEC /Non-OPEC cut agreement. I mean, fair play to the countries behind the agreement; you don't get more heavy-hitting than the Saudi king and the Russian numero uno to talk up the oil market, do you? But let me tell you this, if you had Lionel Messi and Cristiano Ronaldo both in your football team, would you let them both start against Solihull Moors in the first round of the Football League Cup? Exactly. You save them for the Semis. And I think this power-hitting from OPEC may prove something of a false dawn, but we shall see. In my mind, the only factor that can really cause us to see a sustained rise on flat price is a drop in US crude production. Let's face it, the agreement last year never factored in such an aggressive production increase from the US. If this is taken away, then we really could be up to those crazy heights of $70 per bbl and perhaps these highs are not far away? The EIA estimates that shale production is still on the rise, but further gains will be much harder to obtain. Shale companies spent just $5 billion on land deals in West Texas in the last six months - a fraction of the $35 billion spent in the prior nine-month period. I think OPEC may just need to be patient here until at least mid Q1-18 to see if US production does start to plateau. If indeed it ceases to make economic sense, then all balls are in their court.

Fuel Oil Market (October 5)

The front crack opened at -8.15, strengthening to -8.05, before weakening to -8.20, ending the day at -8.00. The Cal 18 was valued at -8.05.

Cash premiums for Asia's 380 cSt fuel oil were little changed on Thursday amid a surge in buying appetite from BP and Hin Leong for a second straight session.

In the paper markets, the Nov/Dec 380-cst spread was also steady to Wednesday's premium, at about $1.85 a tonne. Singapore onshore fuel oil inventories fell to a total of 3.37 million tonnes in the week to Oct. 4, down 3 percent, or 107,000 tonnes, from the previous week.

This came as weekly net imports into Singapore fell 67% from a week earlier to an eight-week low of 457,000 tonnes. Fuel oil stocks were 11 percent lower year-on-year.

Economic Data/Events: (UK times)

*1:30pm: U.S. unemployment rate for Sept., est. 4.4% (prior 4.4%)

*1:30pm U.S. change in nonfarm payrolls for Sept., est. 80k (prior 156k)

*3pm: U.S. wholesale inventories m/m for Aug., final, est. 1% (prior 1%)

*6pm: U.S. Baker Hughes weekly oil, gas rig counts

*8:30pm: U.S. CFTC weekly Commitments of Traders report on futures and options contracts

*Today

**ICE weekly commitments of traders report for Brent, gasoil

**Russian Energy Week, final day for business program

Singapore 380 cSt

Nov17 - 324.50 / 326.50

Dec17 - 322.75 / 324.75

Jan18 - 320.75 / 322.75

Feb18 - 319.25 / 321.25

Mar18 - 318.25 / 320.25

Apr18 - 317.50 / 319.50

Q1-18 - 319.50 / 321.50

Q2-18 - 316.50 / 318.50

Q3-18 - 313.75 / 316.25

Q4-18 - 311.75 / 314.25

CAL18 - 315.75 / 318.75

CAL19 - 300.50 / 305.50

CAL20 -284.25 / 291.25

Singapore 180 cSt

Nov17 - 329.25 / 331.25

Dec17 - 328.00 / 330.00

Jan18 -327.00 / 329.00

Feb18 - 326.00 / 328.00

Mar18 - 325.25 / 327.25

Apr18 - 324.50 / 326.50

Q1-18 - 326.00 / 328.00

Q2-18 - 323.25 / 325.25

Q3-18 - 320.25 / 322.75

Q4-18 - 319.25 / 321.75

CAL18 - 322.75 / 325.75

CAL19 - 309.25 / 314.25

CAL20 - 293.50 / 300.50

Rotterdam 380 cSt

Nov17 306.00 / 308.00

Dec17 302.75 / 304.75

Jan18 302.50 / 304.50

Feb18 302.25 / 304.25

Mar18 302.00 / 304.00

Apr18 301.75 / 303.75

Q1-18 302.25 / 304.25

Q2-18 301.00 / 303.00

Q3-18 298.25 / 300.75

Q4-18 294.50 / 297.00

CAL18 300.00 / 303.00

CAL19 283.75 / 288.75

CAL20 266.25 / 273.25

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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.