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Commentary

Brent closed last night down $1.82 to $72.39 and WTI closed at $67.66, down $1.10. EIA data last night proved that API were right (well, right a little bit) as we saw builds on crude inventories, which caused Brent to haemorrhage once again. I fear that as the Syncrude pipeline comes back into action, soon we will see Cushing inventories grow once more - and the bulls certainly won't appreciate that. Product demand looks okay, but stocks are still at a very healthy level, so some real proper dramatic draws will be required before anyone can really take any solace about a possible supply crunch. On that note, I read yesterday that ESAI, in its 5-year global oil outlook, projects "healthy non OPEC supply growth to 2023". And, quote: "There is a misperception that a supply crunch is imminent. In a 5-year horizon, the potential for non-OPEC supply growth is impressive. This will have a bearing on the degree to which OPEC will have to dip into spare capacity to offset disruptions." Unquote. Hmmm. Now, there are of course various other factors that could put a Rouhani-sized spanner in the works, and that is, obviously, possible escalating tensions between the US and Iran. Venezuela production looks perilous, but it has done for about the last 1,500 years. These two factors are all, really, that I can see the bulls hanging on to; and perhaps rightly so. But with the trade war looming ever closer to having a damaging effect on the global economy, I fear the bear in me is really starting to growl. Good day.

Fuel Oil Market (Aug 1)

The front crack opened at -8.20, strengthening to -7.85, before weakening to -8.00. The Cal 19 was valued at -13.75.

The front-month fuel oil crack to Brent crude firmed today amid few signs of easing supply constraints over the near term.

While the strong demand in the Middle East is expected to ease with the passing of summer months, shrinking Iranian fuel oil exports due to U.S. sanctions and shipping disruptions along the Red Sea may keep a lid on resupplies into Singapore, the sources said.

The September 380 cSt barge crack to Brent crude was trading as high as -$7.65 a barrel on Wednesday before easing to about -$7.95 a barrel. By comparison, the crack on Tuesday settled at -$8.20 a barrel, the brokers said. On July 27, the front-month fuel oil crack discount was at its narrowest since November at minus $7.11 a barrel.

Economic data/events (Times are London.)

* 12:30pm: U.S. Challenger Job Cuts for July (prior 19.6%)

* 1:30pm: U.S. Initial Jobless Claims for July 28, est. 220k (prior 217k)

* 1:30pm: U.S. Continuing Claims for July 21, est. 1750k (prior1745k)

* 2:45pm: Bloomberg Consumer Comfort for July 29 (prior 59)

* 3pm: U.S. Factory Orders for June, est. 0.7% (prior 0.4%)

* 3pm: U.S. Durable Goods Orders for June Final (prior (1.0%)

* Today:

** Singapore onshore oil-product stockpile data

** Russian refining maintenance schedule from ministry

** Colorado State University provides its final seasonal forecast adjustment before the usual peak of the Atlantic hurricane season in late August

Singapore 380 cSt

Sep18 - 433.00 / 435.00

Oct18 - 427.50 / 429.50

Nov18 - 423.75 / 425.75

Dec18 - 420.50 / 422.50

Jan19 - 417.00 / 419.00

Feb19 - 413.75 / 415.75

Q4-18 - 423.75 / 425.75

Q1-19 - 413.75 / 415.75

Q2-19 - 403.75 / 406.25

Q3-19 - 384.00 / 386.50

CAL19 - 387.75 / 390.75

CAL20 - 317.25 / 323.25

Singapore 180 cSt

Sep18 - 441.50 / 443.50

Oct18 - 437.25 / 439.25

Nov18 - 434.00 / 436.00

Dec18 - 431.00 / 433.00

Jan19 - 427.00 / 429.00

Feb19 - 424.50 / 426.50

Q4-18 - 434.00 / 436.00

Q1-19 - 424.75 / 426.75

Q2-19 - 416.00 / 418.50

Q3-19 - 400.00 / 402.50

CAL19 - 402.75 / 405.75

CAL20 - 337.25 / 343.25

Rotterdam 3.5%

Sep18 - 411.00 / 413.00

Oct18 - 406.00 / 408.00

Nov18 - 402.25 / 404.25

Dec18 - 398.75 / 400.75

Jan19 - 396.50 / 398.50

Feb19 - 393.75 / 395.75

Q4-18 - 402.50 / 404.50

Q1-19 - 393.75 / 395.75

Q2-19 - 383.50 / 386.00

Q3-19 - 359.50 / 362.00

CAL19 - 365.75 / 368.75

CAL20 - 299.25 / 305.25