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Trends

Rotterdam (ARA) fuel oil - Trading USD 11 lower

Singapore fuel oil - Trading USD 2 lower

US Gulf - Expected to open USD 2 lower

Production indicators pushed oil prices higher

Manufacturing growth indicators from the EU and the US came out mixed on Tuesday. The EU PMI manufacturing number came out slightly below expectations, while the comparable US ISM manufacturing came out higher - the interesting part was, though, that the US ISM Prices Paid, which is a signal for inflation, came out at 77.5 where 73 was expected. Oil prices were supported by the economic data.

Prices came down again as the US government announced criminal investigations towards the safety on the sunken platform. Uncertainty about the effect on the industry lowered prices on risky assets, including oil. BP shares dropped 14% on Tuesday. Brent was during Tuesday trading between 71.5 and 75.4 which is a huge range on a day without contract expiry.

Today, indicators on US unemployment and home sales will drive the market.

Recommendation

We recommend consumers to hedge future exposure at current prices. We think prices will get support from the Friday job report and combined with prices in the lower end of the price range (70 - 80), we see the current prices as buying opportunities.

Consensus: US oil data (Delayed due to Memorial day)

Crude:-200,000 barrels
Distillates: 300,000 barrels
Gasoline: -500,000 barrels
Refinery utilization: -0.3%