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Trends

Rotterdam (ARA) fuel oil - Trading USD 3 higher

Singapore fuel oil - Trading USD 12 higher

US Gulf - Expected to open USD 1 higher

Another day with credit default swaps in focus

French, Spanish and Greek insurance premiums for securing sovereign debt risk increases today as the speculations about the French AAA credit rating is putting pressure on the market. Further, the 5 year default swap on BP is increasing from 1.02% to 1.73% after their attempt to top-kill the oil spill in the Mexican Gulf has failed - BP stock price is down 15% today.

China in focus for hybrid subsidies and PMI manufacturing

The Chinese Ministry of Finance announced Tuesday that it will subsidise buyers of hybrid and electric cars in 5 cities with up to $7,320 for hybrids and 20% more for electric cars. The programme is a pilot project, but if it is implemented across China it will lower demand for motor fuel.

The price tag for a Toyota Prius Hybrid in China is $36,500 versus a Buick Excelle of $16,248 or a Toyota Camry of $23,600 (The 1st and the 10th most popular car in China). If the Prius is getting the full subsidy there will be a significant increase in competitiveness.

Chinese manufacturing indicator - both the national and the private Purchaser Managers Index came out lower than expected, which lowers risky assets this morning.

Recommendation

We recommend consumers to hedge future exposure. We think the current price range is 70-80 and we are in the lower part of this range.