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Oil and fuel oil hedging market update

Commentary

Brent crude oil futures were up $2.8 per barrel, or 4.8 percent, at $62.30 a barrel, and U.S. WTI crude futures were at $53.63 per barrel at 03:58 GMT, up $2.73 per barrel, or 5.4 percent from their last close. Don’t cry for me Argentinaaaaaaa… unless you love a good trade war (then you may be feeling like the most upset person in the world right now). At the G20 China and the U.S. have shaken hands and apologised to each other, pausing the trade war for the time being. This morning, we have seen a very strong reaction by the market to this news, up around $2 on Brent in the first 3 hours of trading. Everything is all rosy again, right? Not so, we have simply found some news to hang the floor of the market on, where as previously the only things you could point to were bearish, making any sort of resistance to downward pressure difficult. There is still the looming overproduction question, with U.S. producers now pumping out over 11.5 million bpd. That is a serious chunk of production to absorb. Now, with the OPEC meeting set for the 6th Dec, the scene is set for a miraculous recovery in the short term, but they will need to deal with higher non-OPEC production, over which they have little control. OPEC may laud their cuts later this week, but in the end they are just opting for a smaller market share, and that can’t sustain them forever. Kick the can down the road, I say; let someone else deal with the hard choices. Sounds like a few politicians we all know.

Fuel Oil Market (Nov 30)

The front crack opened at -4.95, strengthening to -4.35, before weakening to -4.55. The Cal 19 was valued at -11.00.

Cash premiums for Asia’s mainstay 380 cSt high-sulphur fuel oil slipped to a 1-1/2 month low on Friday, weighed down by easing concerns of limited availability of finished grades of the fuel as inventories in the Singapore hub rose this week.

Premiums for 380 cSt cargoes slipped to $5.79 a tonne to Singapore quotes on Friday, from $6.24 in the previous session, and their lowest since Oct. 15.

Weekly fuel oil stocks in the ARA oil and storage hub fell 13 percent, or 133,000 tonnes, to a near eight-month low of 904,000 tonnes in the week ended Nov. 29.

Singapore’s Maritime Port Authority (MPA) will ban the discharge of “wash water” used in ships to scrub engine exhaust from Jan. 1, 2020, the MPA said on Friday.

Economic Events:

* 2:45pm: U.S. Markit Manufacturing PMI, Nov.

* 3pm: U.S. Construction Spending, Oct.

* 3pm: U.S. ISM Manufacturing, Nov.

* Joint Technical Meeting of OPEC+ committee in Vienna which will report on the compliance with OPEC+ deal

* The 24th Conference of the Parties to the UN Framework Convention on Climate Change (COP24), with Saudi Oil Minister Khalid Al-Falih scheduled to attend, Katowice, Poland. Through Dec. 14.

* Bloomberg proprietary forecast of Cushing crude inventory change; plus weekly analyst survey of crude, gasoline, distillate inventories before Wednesday’s EIA weekly inventory report