---

By the Oil Desk at Freight Investor Services Ltd.

Commentary

Brent closed up $0.65 last night to $57.82 and WTI closed up $0.42 to $51.87. I mentioned yesterday that the market at the moment only seems to react off bullish news. Quote: "The oil market seems so ready to pounce on any hint of bullish news but dismisses news of a bearish nature". Now this isn't some recap commentary like a US sitcom does at the end of each series because they have run out of things to write - far from it. Yesterday's market evidenced what I was saying. Tensions in the Middle East are causing the bulls to run away with the market and ignore any other news issues that may be thrown in their faces. I agree with Mr Birol that oil security remains of paramount importance for everyone, so geopolitics and oil will always be linked BUT EIA were dismissed last night like a 'Gordon Strachan Forever' Scottish football scarf. EIA last night said "US crude oil production will average 9.4m bbl/day for the second half of 2017, measuring approximately 340,000 bbl/day more than during the first half of the year". Ummmm. Hang on a second please caller, didn't Mr Barkindo say: "We are not looking at the U.S. as a risk, we are looking at the U.S. as a partner - a strategic partner in the rebalancing process". Well, who needs enemies when OPEC have the US? Wow. Quite why OPEC and the market seem to be dismissing US production and record-high exports is, quite frankly, beyond me. When OPEC extend the production cut, which they will, US producers will once again benefit. And it's not like they are helping the rebalancing is it? They are only benefiting from others trying to help in the same way a bully at school steals another student's Christmas diorama project. Brutal.

Fuel Oil Market (October 16)

The front crack opened at -7.80, weakening to -7.85, before strengthening to -7.75. The Cal 18 was valued at -7.90.

Despite rising crude oil prices, Asia's November fuel oil crack to Dubai crude climbed to a near three-week high of $2.18 a barrel. Potentially lower supplies of the fuel from key exporters including Russia, Iran and Venezuela in the coming months may have contributed to the strength in the fuel oil.

Russian fuel oil exports sank to just above 3 million tonnes in August, their lowest since February last year, as refiners there process more of the fuel to produce higher-value fuels such as gasoline and gasoil.

Nearly a year after the IMO finalised rules that will cap ships' sulphur emissions at 0.5 percent of fuel content in 2020, from 3.5 percent now, the heads of trading firms Vitol, Gunvor, Glencore and Mercuria said there were still too many unanswered questions.

Economic Data/Events: (UK times)

* 9:30am: U.K.

** CPI m/m for Sept., est. 0.3% (prior 0.6%)

** CPI core y/y for Sept., est. 2.7% (prior 2.7%)

** PPI output NSA m/m for Sept., est. 0.2% (prior 0.4%)

* 10am: Eurozone CPI m/m for Sept., est. 0.4% (prior 0.3%)

* 10am: Germany

** ZEW survey current situation for Oct., est. 88.5 (prior 87.9)

** ZEW survey expectations for Oct., est. 20 (prior 17)

* 2:15pm: U.S. industrial production m/m for Sept., est. 0.3% (prior -0.9%)

* 9:30pm: API issues weekly U.S. oil inventory report

** Oil & Money conference, London, including Adnoc CEO Sultan Ahmed Al Jaber

** Nigerian, other WAF programs for December start to be released

** Bloomberg-compiled weekly snapshot of key U.S. refinery outages with offline capacity projections for CDU, FCC units

* Also see WEEKLY AGENDA to Oct. 20

Singapore 380 cSt

Nov17 - 334.75 / 336.75

Dec17 - 333.00 / 335.00

Jan18 - 330.75 / 332.75

Feb18 - 327.50 / 329.50

Mar18 - 326.00 / 328.00

Apr18 - 324.50 / 326.50

Q1-18 - 328.00 / 330.00

Q2-18 - 324.00 / 326.00

Q3-18 - 319.50 / 322.00

Q4-18 - 315.75 / 318.25

CAL18 - 322.75 / 325.75

CAL19 - 303.00 / 308.00

CAL20 - 284.00 / 291.00

Singapore 180 cSt

Nov17 - 339.75 / 341.75

Dec17 - 338.50 / 340.50

Jan18 - 337.00 / 339.00

Feb18 - 334.25 / 336.25

Mar18 - 333.00 / 335.00

Apr18 - 331.50 / 333.50

Q1-18 - 334.75 / 336.75

Q2-18 - 330.75 / 332.75

Q3-18 - 326.00 / 328.50

Q4-18 - 323.25 / 325.75

CAL18 - 330.00 / 333.00

CAL19 - 312.25 / 317.25

CAL20 - 293.50 / 300.50

Rotterdam 380 cSt

Nov17 316.00 / 318.00

Dec17 311.75 / 313.75

Jan18 311.25 / 313.25

Feb18 310.75 / 312.75

Mar18 310.25 / 312.25

Apr18 309.50 / 311.50

Q1-18 310.75 / 312.75

Q2-18 308.75 / 310.75

Q3-18 304.50 / 307.00

Q4-18 298.25 / 300.75

CAL18 306.00 / 309.00

CAL19 283.00 / 288.00

CAL20 261.75 / 268.75

---

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.