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Commentary

Brent closed on Friday down $0.08 to $63.23, WTI closed at $57.30 up $0.26. So one week until Christmas day and the market continues to trade sideways. Much to the joy of OPEC producers, Non-OPEC and US shale producers. It seems like the oil market is in the same world as Peppa Pig and her little mates. Everything seems rosy and nice and everyone is rolling on the floor laughing. But what's on the horizon for oil? Well, this is the question. I read an interesting piece yesterday regarding the effect the OPEC/Non OPEC cuts have had: "When the deal was first agreed, we were all told that the three exempt nations, Libya, Iran and Nigeria would have no effect on the deal. To date, their production has increased by 729,000 barrels a day. The US Shale industry was only supposed to be able to start increasing production about now, in the fourth quarter of 2017. Instead, they started in October 2016, and soared 1.33 million barrels since." So OPEC/Non OPEC cuts of 2mn bbls has been wiped out, and for once the IEA have actually written that they don't really see demanding picking up the pace they initially anticipated and 2018 will continue to show a surplus. One thing I have to doff my trilby to, however, is the compliance level OPEC have shown throughout this year - 120%. Amazing really. However, can this level be sustained? Will the US continue to increase production even though the rig count dropped by four last week?

Fuel Oil Market (December 15)

The front crack opened at -9.00, strengthening to -8.90, before weakening to -8.95. The Cal 18 was valued at -8.25.

Muted trade activity left Asia's fuel oil market little changed on Friday but falling inventories in key storage hubs and expectations of narrower arbitrage arrivals in January supported sentiment and narrowed the discount in fuel oil refining margins this week.

The discount of Asia's January 180 cSt fuel oil crack to Brent crude narrowed 4 cents a barrel from the previous session to minus $5.83 a barrel on Friday, up from a 10- month low of minus $6.49 a barrel a week ago.

Fuel oil stocks in the ARA oil hub slipped 1%, or 12,000 tonnes, from the previous week to a total of 1.17 million tonnes in the week ended Dec. 14. Compared with the same time last year, ARA fuel oil inventories are 50% higher and are above the five-year average of 842,000 tonnes for this time of the year.

Economic Data/Events: (UK times)

* 10am: Eurozone CPI y/y, Nov. final, est. 1.5%, prior 1.5%

* 1:30pm Bloomberg forecast of U.S. waterborne LPG exports

* 3pm: U.S. NAHB Housing Market Index, est. 70, prior 70

* 7pm: EIA releases monthly Drilling Productivity Report

* Today:

** Bloomberg proprietary forecast of Cushing inventory change, weekly analyst survey of crude, gasoline, distillates inventories before Wednesday EIA report

** Angolan, Nigerian loading programs for Feb.

** JODI issues world oil exports, output data

Singapore 380 cSt

Jan18 - 360.00 / 362.00

Feb18 - 359.25 / 361.25

Mar18 - 359.25 / 361.25

Apr18 - 359.00 / 361.00

May18 - 358.50 / 360.50

Jun18 - 357.75 / 359.75

Q1-18 - 359.50 / 361.50

Q2-18 - 358.00 / 360.00

Q3-18 - 354.00 / 356.50

Q4-18 - 349.00 / 351.50

CAL18 - 352.50 / 355.50

CAL19 - 319.50 / 324.50

Singapore 180 cSt

Jan18 - 364.25 / 366.25

Feb18 - 364.00 / 366.00

Mar18 - 364.25 / 366.25

Apr18 - 364.50 / 366.50

May18 - 364.25 / 366.25

Jun18 - 363.50 / 365.50

Q1-18 - 364.00 / 366.00

Q2-18 - 363.75 / 365.75

Q3-18 - 360.25 / 362.75

Q4-18 - 355.50 / 358.00

CAL18 - 358.25 / 361.25

CAL19 - 328.25 / 333.25

Rotterdam 380 cSt

Jan18 344.00 / 346.00

Feb18 344.50 / 346.50

Mar18 345.00 / 347.00

Apr18 344.50 / 346.50

May18 343.75 / 345.75

Jun18 342.75 / 344.75

Q1-18 344.50 / 346.50

Q2-18 344.00 / 346.00

Q3-18 339.25 / 341.75

Q4-18 330.75 / 333.25

CAL18 337.25 / 340.25

CAL19 297.25 / 302.25