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Commentary

Brent crude futures were at $69.38 a barrel at 0756 GMT, up $35 cents, or 0.5 percent, from their last close, not far off the three-year high of $70.37 reached on Jan. 15. U.S. WTI crude futures were at $63.93 a barrel, up $36 cents, or 0.6 percent, from their last settlement. Everything is looking rosey this morning, IMF forecasts for the world economy are up, everyone has suddenly remembered that it is winter in the northern hemisphere and said to themselves "oh yeah, probably higher oil consumption, that's great". Meanwhile, the U.S. dollar has lost a lot of ground to sterling of late, and with a weaker dollar comes higher oil. There's going to be a delay in some of the effects of changing market conditions. Look, for example, at the crack and the effect of the increasing share of U.S. lighter crude. The crack has come off as brent has rocketed, but it's strength could easily hold up fuel prices if the trend continues. What about the diminishing profits of refiners with higher crude? Will this diminish demand for crude in large refining areas like China? With these diminishing returns, will refineries be so keen to change to new products for the 2020 fuel change? Less so, I would say. There's always two sides of the same coin, and this coin has been landing on one side for a while now; it could be time for a change.

Fuel Oil Market (January 22)

Economic Data and Events

* 3pm: Richmond Fed Manufacturing Index, Jan., est. 19, prior 20

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

* World Economic Forum in Davos starts, 1st day of 4

Singapore 380 cSt

Feb18 - 377.00 / 379.00

Mar18 - 376.75 / 378.75

Apr18 - 376.75 / 378.75

May18 - 376.25 / 378.25

Jun18 - 375.75 / 377.75

Jul18 - 374.75 / 376.75

Q2-18 - 376.25 / 378.25

Q3-18 - 373.00 / 375.00

Q4-18 - 367.25 / 369.75

Q1-19 - 359.75 / 362.25

CAL19 - 328.50 / 331.50

CAL20 - 272.25 / 277.25

Singapore 180 cSt

Feb18 - 382.50 / 384.50

Mar18 - 382.50 / 384.50

Apr18 - 382.25 / 384.25

May18 - 381.75 / 383.75

Jun18 - 381.25 / 383.25

Jul18 - 380.25 / 382.25

Q2-18 - 381.75 / 383.75

Q3-18 - 378.50 / 380.50

Q4-18 - 373.00 / 375.50

Q1-19 - 366.25 / 368.75

CAL19 - 336.50 / 339.50

CAL20 - 281.50 / 286.50

Rotterdam Barges

Feb18 364.50 / 366.50

Mar18 365.00 / 367.00

Apr18 364.75 / 366.75

May18 364.00 / 366.00

Jun18 363.00 / 365.00

Jul18 361.50 / 363.50

Q2-18 364.00 / 366.00

Q3-18 359.50 / 361.50

Q4-18 349.75 / 352.25

Q1-19 341.75 / 344.25

CAL19 308.00 / 311.00

CAL20 251.50 / 256.50