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Commentary

Brent closed last night up $0.61 to $74.54 and WTI closed at $69.61, up $0.31. Brent has received some support over the last couple of days with news that oil flows through the Red Sea shipping lane of Ba Al-Mandeb have been temporarily halted. Couple this with Iranian threats that the Straits of Hormuz could be shut to crude flows and, potentially you could have the vast majority of Saudi exports shut in. Ouch. How has the market reacted? Well, with about the same anticipation as watching a Tranmere Rovers vs Accrington Stanley pre-season friendly. Who are they? Exactly. Do keep a beady eye on developments in Saudi, though. If you look really closely, and I mean delve into the dark belly that is Google, you may have perhaps have read a story that Citibank have made an argument for $45 oil. It seems that commenting on the market and predictions are easy for anyone. Fingers in the air everyone. I think the market is on the edge of which way will prices go, but it cannot be ignored that Iran, Venezuela, the trade war spat and apparent "robust demand" make the bulls corner that much more appealing in the immediate term. However, it can also be argued that oil production and supply is not declining, nor is it failing to keep up with demand - quite the opposite in fact when you factor in just how exponential the growth has been from over the pond. I think the market is happy with $75 a bbl. It is a happy warm place where it can put its feet up and read a paper by the fire. Will that fire eventually go out, though? Have a good weekend.

Fuel Oil Market (Jul 26)

The front-month fuel oil crack to Brent crude firmed today to -7.35 as Singapore inventories of the fuel plummeted to a 6-1/2-year low amid a steeply backwardated prompt market structure and after months of persistently low arbitrage supplies into the city-state. The August 380 cSt barge crack to Brent crude was trading at a discount of about $7.70 a barrel on Thursday, compared with about minus $7.90 a barrel in the previous session, broker sources said. The frontmonth fuel oil crack discount is at its narrowest since November. This came despite higher crude oil prices on Thursday after Saudi Arabia suspended its oil shipments through a key Red Sea strait in response to an attack on two of its tankers and as data showed U.S. inventories fell to a 3-1/2-year low.

Economic data/events (Times are London.)

* 1:30pm: U.S. GDP, 2Q

* 3pm: University of Michigan Sentiment, July (final)

* ~6:30pm: ICE weekly commitments of traders report for Brent, gasoil

* 8:30pm: CFTC weekly commitments of traders report on various U.S. futures and options contracts

* 6pm: Baker Hughes rig count

Singapore 380 cSt

Aug18 - 454.25 / 456.25

Sep18 - 444.75 / 446.75

Oct18 - 439.25 / 441.25

Nov18 - 435.50 / 437.50

Dec18 - 432.25 / 434.25

Jan19 - 428.50 / 430.50

Q4-18 - 435.75 / 437.75

Q1-19 - 426.00 / 428.00

Q2-19 - 416.50 / 419.00

Q3-19 - 396.25 / 398.75

CAL19 - 395.00 / 398.00

CAL20 - 324.50 / 330.50

Singapore 180 cSt

Aug18 - 461.50 / 463.50

Sep18 - 453.50 / 455.50

Oct18 - 449.25 / 451.25

Nov18 - 445.50 / 447.50

Dec18 - 442.75 / 444.75

Jan19 - 439.25 / 441.25

Q4-18 - 446.00 / 448.00

Q1-19 - 437.00 / 439.00

Q2-19 - 428.75 / 431.25

Q3-19 - 412.25 / 414.75

CAL19 - 410.00 / 413.00

CAL20 - 344.50 / 350.50

Rotterdam 3.5%

Aug18 - 430.75 / 432.75

Sep18 - 424.25 / 426.25

Oct18 - 419.50 / 421.50

Nov18 - 415.75 / 417.75

Dec18 - 412.25 / 414.25

Jan19 - 410.25 / 412.25

Q4-18 - 416.00 / 418.00

Q1-19 - 407.25 / 409.25

Q2-19 - 397.50 / 400.00

Q3-19 - 372.50 / 375.00

CAL19 - 373.00 / 376.00

CAL20 - 306.50 / 312.50