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Trends

Rotterdam (ARA) fuel oil - Trading USD 1 lower

Singapore fuel oil - Trading USD 4 lower

US Gulf fuel oil - Expected to open USD 1 lower

Australian flood spreads to Brisbane

The water is now coming into the suburbs of Queensland's main city. Agricultural areas are flooded and infrastructure that is used for transporting coal to the coast is disrupted. Commodity prices are in general increasing on that behalf. As the flooding increases in magnitude so does the time horizon for normalisation.

Oil prices are supported as Chinese coal plants are missing the Australian coal and hence the industry is left with electric diesel generators. There are some similarities with early 2008 where a major earthquake disrupted electric infrastructure in China and spurred diesel demand and prices.

Release: API oil data (Consensus)

Oil data from the US showed heavy builds in gasoline inventories primarily and totally the report was bearish on oil prices. However, the market shrugged off the numbers as the 96 dollar technical break spurred buying.

Crude: +57,000 barrels (-1,100,000)
Distillates: +1,554,000 barrels (+1,000,000)
Gasoline: +7,036,000 barrels (1,000,000)

Today, FED Beige Book report on the economy is key.

Recommendation

Brent oil prices ended above the long term resistance of USD 92 in December. This means that we are now seeing a new range between 92 and 105 forming. We recommend consumers to hedge at current levels.

The short term range is between 96 and 98 dollar per barrel on the Brent.