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Commentary

Brent closed Friday up $1.54 to $70.45, WTI closed at $65.88, up $1.58. I haven't put a $7 handle on my commentary for quite some time. The question is: can Brent stay there? We have hit $70 five times in 2018 already but it has just proven that bridge too far to become the new pivot point. The time prior to 2018 that Brent was in the $70 per bbl territory was December 2014. In December 2014, US oil production was 9.45mn bpd. Today it is approx 1mn bpd higher than that. So, what is pushing this rally on Brent? Well, aside from all the usual culprits (i.e. US dollar weakness, geopolitics and continued OPEC cut compliance), I can only surmise that the reason prices are up here is due to what possibly might happen in Iran and Venezuela regarding sanctions. Now, I and the rest of the market are speculating that this might be the reason, but when has this market ever needed evidenced fact to buy into a rally? The next few days are key for the market, and we will see if Brent manages to sustain itself up here. What else is going on? Chinese crude futures were launched this morning and so far the uptake has been good. Whether this will have any real bearing on the other crude benchmarks I'm not quite sure, but traders love a new toy so I applaud China for bringing in something that could stoke up some volatility.

Fuel Oil Market (March 23)

The front crack opened at -12.20, strengthening to -11.75, before weakening to -12.00. The Cal 19 was valued at -15.10..

Asia's 380 fuel oil cash differential narrowed its discount on Friday, rising from a near two-year low in the previous session, but was lower from last week as suppliers offered cargoes of the fuel at discounted prices.

Cash discounts for 380 cSt fuel oil rose to minus $1.24 a tonne to Singapore quotes, up from a discount of $1.94 per tonne in the previous session.

By comparison, the week-ago cash differential of 380-cst fuel oil was at a narrow premium of 5 cents a tonne to Singapore quotes.

Economic Data and Events

* 1:30pm: Chicago Fed Nat Activity Index for Feb., est. 0.15 (prior 0.12)

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

* 3:30pm: Dallas Fed Manf. Activity for March, est. 33.5 (prior 37.2)

* Opening day of Scotia Howard Weil Annual Energy Conference in New Orleans with speakers from Devon Energy, Transocean and Chevron among others

* Angola final program for May

* Russia Urals full-month program for April

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

Singapore 380 cSt

Apr18 - 375.50 / 377.50

May18 - 375.25 / 377.25

Jun18 - 374.75 / 376.75

Jul18 - 373.75 / 375.75

Aug18 - 372.25 / 374.25

Sep18 - 370.00 / 372.00

Q2-18 - 375.25 / 377.25

Q3-18 - 372.00 / 374.00

Q4-18 - 365.75 / 368.25

Q1-19 - 358.00 / 360.50

CAL19 - 328.75 / 332.75

CAL20 - 270.75 / 278.75

Singapore 180 cSt

Apr18 - 383.75 / 385.75

May18 - 383.25 / 385.25

Jun18 - 382.50 / 384.50

Jul18 - 381.50 / 383.50

Aug18 - 380.00 / 382.00

Sep18 - 378.00 / 380.00

Q2-18 - 383.00 / 385.00

Q3-18 - 380.00 / 382.00

Q4-18 - 373.75 / 376.25

Q1-19 - 366.50 / 369.00

CAL19 - 341.75 / 345.75

CAL20 - 294.75 / 302.75

Rotterdam Barges

Apr18 364.00 / 366.00

May18 364.00 / 366.00

Jun18 363.25 / 365.25

Jul18 361.50 / 363.50

Aug18 359.50 / 361.50

Sep18 356.50 / 358.50

Q2-18 363.75 / 365.75

Q3-18 359.25 / 361.25

Q4-18 349.50 / 352.00

Q1-19 341.50 / 344.00

CAL19 309.25 / 313.25

CAL20 247.25 / 255.25