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Trends

Rotterdam (ARA) fuel oil - USD5 lower

Singapore fuel oil - USD2 lower

US Gulf fuel oil - USD7 lower

Norwegian situation resolved (Brent: $98.5)

11th-hour solution in Norway – Brent retraces

Brent prices rose above $100 yesterday, as the midnight deadline approached. When the clock stroke midnight no solution was in place. However at 00.10 Minister Hanne Bjurstrøm informed that she would end the conflict with immediate effect. Workers are to resume to their stations, while the dispute will be settled in arbitration. So far an approximate 300,000 bpd has been missing in Norwegian production. Had the lockout taken full effect a staggering 2 million bpd would be missing in addition to the +1 mbpd from Iran. Full scale Norwegian production is expected within the coming 7 days.

Iran considers their next move

In other news, The Iranian parliament is working on implementing tariffs for ships entering the Strait of Hormuz. Threats to close the Strait are still circulating.

Lower Chinese crude import for June, compared to record month May keeps the fires going on the economic slowdown story. As commented in yesterday’s briefing, we believe rumours of a Chinese growth package will intensify should there be a trend of bad numbers. Any rescue package is expected to have a significant bullish effect on oil prices.

Recommendation

A lot of volatility is scheduled ahead. As liquidity usually decreases over the summer clients are advised to take advantage of any “outliers” in prices. Sparked either by news from the Middle East or the never-ending Global debt story. We recommend consumers to enter hedges should it suit your budgets.