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Trends

Rotterdam (ARA) fuel oil - USD3 lower

Singapore fuel oil - USD4 higher

US Gulf fuel oil - USD3 lower

Moscow nuclear talks, final day (Brent: $95.7)

The talks between Iran and the P5+1 in Moscow produced a whole bag of nothing. Both sides failed to agree on anything with a substance, and the much dented can has been kicked further down the road. By the end of this month, however, there will be no more road before sanctions kick into full effect. While the already missing Iranian exports (-40%) have been largely offset by increased Saudi production, Iran is expected to export 1-200,000 bpd less after 1 July. On the supply side, there should be a limited effect on oil prices, but the dark horse on the failed agreement on Iran’s nuclear program is whether Israel will follow up on its harsh rhetoric. Israel has previously and repeatedly threatened to attack Iranian nuclear sites if diplomacy fails.

FED statement

Later today (18.30 CET) the FED will announce interest rates. They are widely expected to keep rates at their current levels, and as such the whole thing should be a non-event. The press conference at 20.15 CET, however, will be of higher importance, as Chairman Ben Bernanke will present the FED's view on the US economy.

Until recently the oil market and equity markets have experienced a very strong correlation (i.e. close to 1.0). From early June however, the correlation has dropped to the other end of the -1 to 1-scale. Today’s figure is -0.71, meaning oil is dropping when equities are rising, and vice versa. Given that financial numbers tend to revert towards their historic mean, we should see either a rebound in oil prices, or a drop in equities with no oil price movement.