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Trends

Rotterdam (ARA) fuel oil - Trading USD 3 higher

Singapore fuel oil - Trading USD 2 lower

US Gulf - Expected to open USD 1 lower

Car sales in China increase at a slower pace

Brent and WTI faced sell-offs on thin trading day as signs of a cooling Chinese economy was in focus again. China Automotive & Research Centre reported a slowdown in car sales in June compared to April and May. Tightening credit and liquidity measures imposed by the Chinese government continue to worry investors on global recovery pace in the second half of 2010.

New hurricane possibility

US Hurricane Centre assigns 30% probability to the tropical depression in the Caribbean turning into the second hurricane of the season within 48 hours. Upon its formation, Hurricane Bonnie is expected to follow a similar path to Alex and might cause oil price spikes due to supply concerns in the Gulf of Mexico.

BP's strategic moves

According to a Bloomberg report, BP might be selling its fields in Venezuela, Colombia and Vietnam. Seeking to raise cash for clean-up costs and maintain its operational independence at the same time, BP was rumoured to turn to sovereign wealth funds and Middle Eastern investors during last week.

Today's important numbers include US ISM PMI and US Consumer Comfort Index.

Recommendation

We do not expect large oil price swings in the upcoming days unless there is a real support from a possible hurricane. Investors will be looking at API and EIA data for large inventory draws to take positions. We are still trading at the bottom of the $70-80/barrel range and recommend hedging at current levels.