Image credit: Freight Investor Services (FIS)

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Commentary

Oil prices are up and down, with the same continuing news of possibly oversupply and global correctio!

- Global trade shows signs of slowdown, energy stocks slump
- Brent curve eyes contango:
- But oil fundamentals remain tight on Iran sanctions
- Iran oil exports already falling:
Oil prices fell early this morning and were heading for a third weekly loss, as Saudi Arabia warned of oversupply amid a slump in global equities and trade that cloud the fuel outlook for demand. They have since corrected at the time of writing and the flip-flop trend continues!

The near $10 per barrel drop in Brent crude seen over October is a spillover from the global sell-off in equities," Fitch Solutions said in a note. Stock price plunges have roiled oil markets this week as Wall Street had its biggest daily decline since 2011, wiping out all of this year's previous gains. This has also impacted energy firms, with the Australian energy index .AXEJ, which tracks the country's main oil and gas firms, down 10 percent this week in what is the biggest fall in three years. Financial markets have been hit hard by a range of worries, including the U.S.-China trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, and economic concerns in Italy.

There are also signs of a slowdown in global trade, with container and bulk freight rates dropping after rising for most of 2018. U.S. investment bank Jefferies said "the Brent curve is flirting with contango, a troubling development that we expect is at least in part driven by managed money liquidation in a broader risk-off trade." Contango describes a market in which prices for future delivery are higher than the spot market, implying oversupply as it can make it attractive for traders store oil rather than sell it. So far, the 2018 oil market has been dominated by backwardation, implying a tight market as spot prices are higher than those further out, incentivising the sale of oil rather than storing it.

Fuel Oil Market (Oct 25)

Cash premiums for cargoes 380 cSt high-sulphur fuel oil hit a more than three-month high today, lifted by tight near-term supplies for finished grades of the fuel coupled with steady demand. Premiums for 380 cSt cargoes climbed to $7.63 a tonne to Singapore quotes on Thursday, up from $6.99 in the previous session and their highest since July 20. Meanwhile, Singapore fuel oil inventories hit a two-week high in the week to Oct. 24, in line with higher weekly net fuel imports, official data showed on Thursday.

Window Trades

No cargo trades were reported in the Singapore trading window.

Singapore 380 cSt

Nov18 - 480.50 / 482.50

Dec18 - 472.50 / 474.50

Jan19 - 464.50 / 466.50

Feb19 - 457.75 / 459.75

Mar19 - 452.25 / 454.25

Apr19 - 447.25 / 449.25

Q1-19 - 458.00 / 460.00

Q2-19 - 442.25 / 444.25

Q3-19 - 421.75 / 424.25

Q4-19 - 388.00 / 390.50

CAL19 - 425.25 / 428.25

CAL20 - 355.75 / 361.75

Singapore 180 cSt

Nov18 - 486.75 / 488.75

Dec18 - 479.75 / 481.75

Jan19 - 473.25 / 475.25

Feb19 - 467.00 / 469.00

Mar19 - 462.00 / 464.00

Apr19 - 457.50 / 459.50

Q1-19 - 467.25 / 469.25

Q2-19 - 452.75 / 454.75

Q3-19 - 435.25 / 437.75

Q4-19 - 407.25 / 409.75

CAL19 - 438.25 / 441.25

CAL20 - 377.75 / 383.75

Rotterdam 3.5%

Nov18 - 450.75 / 452.75

Dec18 - 441.25 / 443.25

Jan19 - 434.75 / 436.75

Feb19 - 429.75 / 431.75

Mar19 - 425.25 / 427.25

Apr19 - 420.75 / 422.75

Q1-19 - 429.75 / 431.75

Q2-19 - 415.75 / 417.75

Q3-19 - 394.75 / 397.25

Q4-19 - 359.25 / 361.75

CAL19 - 398.00 / 401.00