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Commentary

Brent closed last night at $63.80 up $0.39, WTI closed at $57.56 up $0.50. Another Tuesday and another round of fairly pointless API data. I'm not sure if everyone has been on a bender at API, but it looks like they have forecast exactly what they did last week. In the good old days when people did view US storage data as the weekly pivot for where prices should go, a 5mn bbl draw on crude would be supportive, but alas times move on. The data that prices will react off, though, will be US oil production. Last week, we saw the US rig count drop by four, so if US production does increase again does this show us all, once again, that the US production system is becoming ever more efficient? It's fairly simple in my eyes: in February 2016, US crude oil futures were at a 12-year low. In May 2016, the oil rig count fell to 316, a 6.5-year low. Since then, US crude oil prices have risen 118.1% from their multi-year low. Similarly, the oil rig count has doubled from its multi-year low. Since May 2016, US crude oil production has risen 12%. Therefore, unless you are so full of eggnog that you can't see properly, anyone in the oil business should watch the number of active oil rigs. With the Saudi budget forecasting a 12% increase in oil revenues for next year, we can already start the conversation that the market share battle is not going away quickly.

Fuel Oil Market (December 19)

The front crack opened at -8.55, strengthening to -8.40, before weakening to -8.50. The Cal 18 was valued at -8.05.

Elevated deal values for physical cargoes of 380 cSt highsulphur fuel oil (HSFO) lifted cash premiums of the mainstay residual fuel to a more than one-month high on Tuesday.

By contrast, cash premiums of the lower viscosity 180 cSt HSFO fell from their near three-month high in the previous session as suppliers accepted lower premiums for cargoes of the fuel, trade sources said.

Singapore-based Pavilion Gas Pte Ltd said today it has been awarded a LNG bunker supply contract by PSA Marine Pte Ltd for the supply of LNG bunker fuel from 2019. LNG bunker fuel to be supplied to two harbour tugs that can run on both LNG and standard marine fuel and that are due to be delivered to PSA Marine in 2019.

Economic Data/Events: (UK times)

* 12pm: U.S. MBA mortgage applications for Dec. 15 (prior -2.3%)

* 3pm: U.S. November existing home sales, est. 5.53m (prior 5.48m)

* 3:30pm: EIA weekly oil inventory report; TOPLive blog coverage begins 3:25pm

* Today:

** Genscape weekly ARA crude stockpiles report

** Ten-day Russia Urals program for January

Singapore 380 cSt

Jan18 - 363.50 / 365.50

Feb18 - 362.50 / 364.50

Mar18 - 362.25 / 364.25

Apr18 - 361.75 / 363.75

May18 - 361.25 / 363.25

Jun18 - 360.25 / 362.25

Q1-18 - 362.75 / 364.75

Q2-18 - 360.75 / 362.75

Q3-18 - 357.00 / 359.50

Q4-18 - 352.50 / 355.00

CAL18 - 358.00 / 361.00

CAL19 - 324.75 / 329.75

Singapore 180 cSt

Jan18 - 367.75 / 369.75

Feb18 - 367.50 / 369.50

Mar18 - 367.50 / 369.50

Apr18 - 367.25 / 369.25

May18 - 366.75 / 368.75

Jun18 - 366.00 / 368.00

Q1-18 - 367.50 / 369.50

Q2-18 - 366.00 / 368.00

Q3-18 - 363.00 / 365.50

Q4-18 - 358.75 / 361.25

CAL18 - 363.50 / 366.50

CAL19 - 333.50 / 338.50

Rotterdam 380 cSt

Jan18 347.50 / 349.50

Feb18 347.75 / 349.75

Mar18 347.75 / 349.75

Apr18 347.25 / 349.25

May18 346.25 / 348.25

Jun18 345.00 / 347.00

Q1-18 347.75 / 349.75

Q2-18 346.00 / 348.00

Q3-18 340.75 / 343.25

Q4-18 331.75 / 334.25

CAL18 342.00 / 345.00

CAL19 301.00 / 306.00