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Commentary

Brent closed last night up $0.20 to $78.43 and WTI closed at $71.31, up $0.35. It was reported in an article yesterday that there is a massive fracture between the physical and futures oil markets, and it has been fractured for quite some time. Once the bulls start to take some profit, I agree that we will see the market come off, and come off pretty aggressively. But let's be clear, the time when this market was driven totally by fundamentals is over. The fact that 50% of the market is controlled by hedge funds means that now needs to be taken into account - and therefore explain some of this disconnect. It's like North Korea. We all know that his highness Kim's regime is using this as a way to ease tensions to allow more resources into the country as things must be getting very short recently after more sanctions. We all know that after a while he will switch back to his old ways again. The market has known that the U.S. would take advantage of higher prices, its increasing production, and all the other fundamental factors, and yet the market does as the market does - everyone feign surprise. Mr Andurand says we may get crude up to $300 per bbl, but he runs a fund that only buys crude derivatives, so of course he is going to say that. He's not going to say: "Listen guys, I'm long, but I think prices are more reasonable at about the $60 per bbl mark. Can I have some of your money so I can buy crude futures please?". What will happen next? Not so sure on that. I suppose it is whether the market has the stomach to push that $80 level. Stats later. Good day. Fuel Oil Market (May 15)

Ongoing supply constraints lifted cash premiums of Asia's 380 cSt high-sulphur fuel oil today. Traders said the ample supplies of high-viscosity, high-density fuel oil in Singapore and a shortage of cutter-stock since around the start of April is likely to keep prices elevated over the near term.

Higher crude prices weighed on the fuel oil crack early on, trading at -12.40 but bounced back to - 12 as trade sources said the fuel oil crack continues to be strong relative to recent gains in crude oil.

The cal 19 crack traded at -18.15.

Economic Data and Events: (Times are London.)

* 3:30pm: U.S. EIA weekly oil inventory report

* APPEA Oil & Gas Conference and Exhibition in Adelaide, 3rd day of 4

* IEA monthly oil market report, including supply/demand forecasts and estimates of OPEC's April production levels

* EU leaders meet at an informal dinner in Sofia, Bulgaria, to discuss global trade and the U.S. decision to leave the Iran nuclear deal

* Genscape weekly ARA crude stockpiles report

* Angola crude loading program for July (preliminary)

Singapore 380 cSt

Jun18 - 434.25 / 436.25

Jul18 - 431.00 / 433.00

Aug18 - 427.50 / 429.50

Sep18 - 424.25 / 426.25

Oct18 - 421.25 / 423.25

Nov18 - 418.00 / 420.00

Q3-18 - 427.75 / 429.75

Q4-18 - 417.75 / 419.75

Q1-19 - 406.25 / 408.75

Q2-19 - 395.75 / 398.25

CAL19 - 364.00 / 367.00

CAL20 - 298.50 / 303.50

Singapore 180 cSt

Jun18 - 444.25 / 446.25

Jul18 - 441.25 / 443.25

Aug18 - 437.50 / 439.50

Sep18 - 434.50 / 436.50

Oct18 - 431.75 / 433.75

Nov18 - 428.50 / 430.50

Q3-18 - 437.75 / 439.75

Q4-18 - 428.25 / 430.25

Q1-19 - 417.25 / 419.75

Q2-19 - 407.00 / 409.50

CAL19 - 378.50 / 381.50

CAL20 - 322.50 / 327.50

Rotterdam Barges

Jun18 - 419.75 / 421.75

Jul18 - 416.75 / 418.75

Aug18 - 413.00 / 415.00

Sep18 - 408.50 / 410.50

Oct18 - 404.00 / 406.00

Nov18 - 399.50 / 401.50

Q3-18 - 412.75 / 414.75

Q4-18 - 399.50 / 401.50

Q1-19 - 386.00 / 388.50

Q2-19 - 369.25 / 371.75

CAL19 - 342.50 / 345.50

CAL20 - 265.75 / 270.75