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Trends

Rotterdam (ARA) fuel oil - Trading USD 4 higher

Singapore fuel oil - Trading USD 10 higher

US Gulf - Expected to open USD 1 higher

Brent and WTI rally on improving US manufacturing data

Empire State Business conditions index, an indicator of New York manufacturing strength, was up in June compared to May. Brent and WTI increased as this data triggered a fresh wave of investor confidence in global recovery.

BP oil spill raise further concerns about off-shore oil drilling projects

As leakage from BP's Macondo oil well continues to threaten the environment and BP's future economic health, investors started looking at supply/demand effects of possible oil shortages and regulatory bans in off-shore oil drilling projects. These effects might not have a large short-term impact but they are expected to be priced in as longer-term fundamental analysis takes over.

Obama wants BP to establish a fund to guarantee it would cover the billions of dollars needed to clean up the mess and compensate people and businesses hurt by it. BP executives are meeting with the US government today.

US and IMF pushing for yuan revaluation again

US Treasury Secretary Timothy Geithner and IMF Chief Economist Olivier Blanchard reinitiated the pressure talks on China for an imminent yuan revaluation. A possible yuan revaluation would support oil prices further since it would enable China to buy oil cheaper in its domestic currency.

Today's important numbers include EIA inventory data, US Housing Starts, US Industrial Output and EU Key Inflation Indicators.

Recommendation

Oil prices broke a key technical resistance of 76.53$/barrel as of yesterday. We are now in the 75-80$ range and if investor mood continues to improve, we will be back in the 80-90$ range within a month. Therefore, we recommend to hedge future consumption at current levels.

Release: API oil data (Consensus)

Net bearish on oil prices as a combined higher product inventories and lower refinery throughput signals lower demand.

* Crude: 579,000 barrels (-1,200,000 barrels)
* Distillates: 2,143,000 barrels (1,000,000 barrels)
* Gasoline: 1,344,000 barrels (200,000 barrels)
* Refinery utilization: 85.1% (86.9%)