---

Commentary

Brent closed down $1.64 last night to $61.22 and WTI closed at $55.96 down $1.66. Well, a fairly brutal day for crude yesterday, but one which shouldn't come as a surprise. I wrote earlier this week how I will be ignoring weekly US crude data and focusing on products and US crude production. It seems as if the market agrees with me as despite a not insignificant draw on crude, the market tanked. This is down to product stocks up a total of 8.5mn bbls, refinery runs up and US production up. I think the market has finally cottoned on to the fact that even though the initial crude number may seem bullish, the actual crude isn't actually going anywhere. In fact, with such a large build on products even the US can't export products quick enough as (and I will say this until I am blue in the face like Violet from Willy Wonka and the Chocolate factory) DEMAND ISN'T AS GOOD AS PEOPLE SAY. The irony is the fact that OPEC last week gave the US producers something to actually think about. It's like getting your first Scalextric set for Christmas: you put it all together in a hurried excited manner and the first few laps you take it nice and slow then bam! the urge to go full throttle takes over, and before you know it, your new Scalextric car is in a heap under the sofa. The US producers will not go full throttle, however; they will take their time, because if they start ramping up production straight away, then they will shoot themselves in the foot, flat price will come off, then round that stupid merry go round we go again. In other news, keep your eye on just about every oil product structure out there. The dream of "contango" could very well soon be upon us if it's not already.

Fuel Oil Market (December 6)

The front crack opened at -8.90, strengthening to -8.85, before weakening to -9.20. The Cal 18 was valued at -8.20.

Cash discounts of Asia's 180-cst fuel oil sank to their lowest since late-August amid aggressive supplier offers for the lower viscosity fuel.

Meanwhile the December visco spread, the price differential between 180-cst and 380-cst swaps, fell to a premium of $3.75 a tonne, its lowest since Nov. 28.

Pakistan State Oil has suspended imports of fuel oil after an abrupt drop in domestic demand as the country turns to LNG to fuel its power sector..

Fujairah fuel oil inventories rose 13%, or 1.406 million barrels (about 210,000 tonnes), from a week ago to 12.314 million barrels (1.84 million tonnes) in the week ended Dec. 4. Fuel oil inventories in the Fujairah oil hub are now at their highest since the week to July 17.

Economic Data/Events: (UK times)

* 7am: German Oct. Industrial Production M/M, Est. 0.9% (Prior -1.6%)

* 10am: Euro Area 3Q GDP Chained 2010 Prices, Est. 0.6% (Prior 0.6)

* 1:30pm: U.S. Initial Jobless Claims for Week to Dec. 2, Est. 240k (Prior 238k)

* 2:45pm: U.S. Bloomberg Consumer Comfort Index to Dec. 3, (Prior 51.6)

* S&P Platts Global Energy Outlook Forum, New York

* ICIS China Conference, 2nd day of 3

Singapore 380 cSt

Jan18 - 345.25 / 347.25

Feb18 - 3345.50 / 347.50

Mar18 - 346.00 / 348.00

Apr18 - 346.25 / 348.25

May18 - 346.00 / 348.00

Jun18 - 345.25 / 347.25

Q1-18 - 345.50 / 347.50

Q2-18 - 346.00 / 348.00

Q3-18 - 343.75 / 346.25

Q4-18 - 3340.50 / 343.00

CAL18 - 345.50 / 348.50

CAL19 - 310.50 / 315.50

Singapore 180 cSt

Jan18 - 349.75 / 351.75

Feb18 - 350.25 / 352.25

Mar18 - 351.00 / 353.00

Apr18 - 351.75 / 353.75

May18 - 351.75 / 353.75

Jun18 - 351.00 / 353.00

Q1-18 - 350.25 / 352.25

Q2-18 - 351.75 / 353.75

Q3-18 - 350.00 / 352.50

Q4-18 - 347.00 / 349.50

CAL18 - 351.25 / 354.25

CAL19 - 319.25 / 324.25

Rotterdam 380 cSt

Jan18 329.75 / 331.75

Feb18 331.25 / 333.25

Mar18 332.25 / 334.25

Apr18 332.75 / 334.75

May18 332.50 / 334.50

Jun18 332.00 / 334.00

Q1-18 331.00 / 333.00

Q2-18 332.50 / 334.50

Q3-18 329.75 / 332.25

Q4-18 322.50 / 325.00

CAL18 329.50 / 332.50

CAL19 290.50 / 295.50