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Trends

Rotterdam (ARA) fuel oil - US$8 higher
Singapore fuel oil - US$9 higher
US Gulf - US$9 higher

Markets regain momentum

Oil gained 3% yesterday on the back of better-than-expected macroeconomic data and weaker dollar. British retail sales, Eurozone industrial orders, US jobless claims and many US companies’ Q2 earnings came out stronger than previous readings, boosting risk appetite.

Stress tests under spotlight

European banks’ stress test results are due today at 6pm CET. Investors have been waiting anxiously for these results to judge the strength of European banking system and its resilience against further escalations of the sovereign debt crisis.

Bonnie approaching Gulf of Mexico

Tropical storm Bonnie, the second named hurricane of the season, is expected to move over the Bahamas today, reaching the Gulf of Mexico by tomorrow. Authorities are expecting evacuations in the area as the storm closes in, causing possible supply disruptions and delays in BP's oil well sealing efforts.

Today's important numbers include French consumer spending, German IFO business climate / expectations, British Q2 GDP and US ECRI weekly leading indicators.

Recommendation

We have been trading in a range of $75-78/barrel since last week. Positive stress test results, thus further dollar weakness and increased risk appetite, can cause another test of $80/barrel resistance. Failure will bring us down back to the strong support at $75/barrel. We recommend to wait for the results and hedge accordingly.