Image credit: Freight Investor Services (FIS)

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Commentary

Front-month Brent crude futures were at $72.41 per barrel at 0348 GMT on Monday, down 42 cents, or 0.6 percent from their last close, and U.S. WTI crude futures were down 35 cents, or 0.6 percent, at $62.79 a barrel. I'm sure you have all read the news this morning on the U.S. granting exemptions to eight importers of Iranian crude. This is likely to include China, South Korea, India, and Taiwan, and has caused a significant slump in prices since its leak via a U.S. official last week. The question now is 'why'? It's not out of the goodness of their hearts that the U.S. administration has given these exemptions; it's not because they willingly want to undermine the effectiveness of their own sanctions, it's just politics. This month, we have the U.S. midterm elections, and nothing is easier to attack an opponent for than 'needlessly' increasing the living expenses of good, honest, hard-working Americans. With such high oil prices, in part aided by the announcement of new Iranian sanctions, there has been the inevitable impact of higher gasoline prices. Now I'm not being cynical, well actually I probably am, but it seems these exemptions are a shrewd political decision. Now, if you accept this theory, your next question is 'what happens post-election'? I would imagine the U.S. would be tempted to threaten rescinding those exemptions, in it's usual grown-up approach to geopolitics we have seen over the past two years.

Fuel Oil Market (Nov 2)

The front crack opened at -6.25, strengthening to -5.85, before weakening to -6.25. The Cal 19 was valued at -12.00.

Asia's prompt month-time spread for 380 cSt fuel oil grade extended gains on Friday as the supply crunch persisted. The 380 cSt Nov/Dec time spread was trading at about $12.25 a tonne, up from $11.50 a tonne on Thursday.

Fuel oil stocks held in the ARA refining and storage hub for instance fell to a near 7-month low of 944,000 tonnes in the week to Nov. 1, data from Dutch consultancy PJK International showed, with cargoes moving to Suez and Singapore.

This mirrored the trend in Singapore where fuel oil inventories dropped 16 percent to reach a six-week low of 15.5 million barrels in the week to Wednesday, official data showed.

Economic Events: (Times are UK)

* U.S. sanctions on Iranian oil flows go back into effect. Global companies that continue buying Iranian crude risk being cut off from America's financial system; 8 countries have waivers, according to an official

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

* African Oil Week starts in Cape Town. Conference events mostly during Nov. 6-8, including exploration company CEOs, African national oil company executives and energy ministers

* Earnings: Occidental Petroleum Corp. Singapore 380 cSt

Dec18 - 461.50 / 463.50

Jan19 - 451.50 / 453.50

Feb19 - 443.50 / 445.50

Mar19 - 437.50 / 439.50

Apr19 - 431.75 / 433.75

May19 - 426.00 / 428.00

Q1-19 - 444.25 / 446.25

Q2-19 - 426.00 / 428.00

Q3-19 - 403.50 / 406.00

Q4-19 - 369.75 / 372.25

CAL19 - 407.00 / 410.00

CAL20 - 335.75 / 341.75

Singapore 180 cSt

Dec18 - 468.00 / 470.00

Jan19 - 459.25 / 461.25

Feb19 - 452.00 / 454.00

Mar19 - 446.75 / 448.75

Apr19 - 441.50 / 443.50

May19 - 436.25 / 438.25

Q1-19 - 452.75 / 454.75

Q2-19 - 436.25 / 438.25

Q3-19 - 416.00 / 418.50

Q4-19 - 388.50 / 391.00

CAL19 - 419.00 / 422.00

CAL20 - 357.50 / 363.50

Rotterdam 3.5%

Dec18 - 422.50 / 424.50

Jan19 - 416.00 / 418.00

Feb19 - 410.50 / 412.50

Mar19 - 405.50 / 407.50

Apr19 - 401.00 / 403.00

May19 - 396.00 / 398.00

Q1-19 - 410.75 / 412.75

Q2-19 - 396.00 / 398.00

Q3-19 - 374.00 / 376.50

Q4-19 - 338.75 / 341.25

CAL19 - 376.75 / 379.75

CAL20 - 314.25 / 320.25

0.1% Rott barges Gasoil

Dec18 - 651.09 / 653.09

Jan19 - 648.89 / 650.89

Feb19 - 647.26 / 649.26

Mar19 - 646.51 / 648.51

Apr19 - 645.40 / 647.40

May19 - 644.68 / 646.68

Q1-19 - 646.39 / 648.39

Q2-19 - 645.39 / 647.39

Q3-19 - 648.60 / 651.10

Q4-19 - 654.07 / 657.07

CAL19 - 648.60 / 651.80

CAL20 - 654.07 / 647.63

Sing GO 10ppm

Dec18 - 88.69 / 88.89

Jan19 - 88.46 / 88.66

Feb19 - 88.26 / 88.46

Mar19 - 88.25 / 88.45

Apr19 - 88.25 / 88.45

May19 - 88.25 / 88.45

Q1-19 - 88.26 / 88.46

Q2-19 - 88.18 / 88.38

Q3-19 - 88.48 / 88.68

Q4-19 - 88.72 / 88.92

CAL19 - 88.41 / 88.61

CAL20 - 88.52 / 88.72