*Despite Bullish API Predictions Crude Falls*
Even though the API predicted that there was going to be a draw of 5.42M bbls, European open was a bearish start, with prices dropping below the $43 for Brent. Overnight, prices had moved up after the release of the data to almost $43.50, but this did not hold.
*All Aboard the Backwardation Train*
Front fuel oil spreads on the HSFO and VLSFO have both moved into backwardation. This is the first time they have been concurrently so since the price collapse on crude in the midst of the Covid-19 crisis. Rott 3.5% Nov/Dec spread is now valued at 1.50, as is Sing 380, Rott 0.5% is at 1.25, and Sing 0.5% 1.75. This does signal that demand is starting to return to the market, lifting prompt prices, as demand and supply have started to equalise.
*USG Production Mostly Back Running*
According to Reuters, less than a third of the USG offshore crude production remains shut after Hurricane Delta blasted through the region. Shut crude oil production is currently estimated at 31% or, 568,505 bpd. This was down from 41% the previous week.
*Japan Seeing Steady Fuel Demand Increase*
Bunker sales in Japan according to Ship and Bunker have increased on August. August levels were at 87,000 bpd, an 8% increase on August’s volumes. It was, however, down on July levels, but it seems that some 90% of demand has returned.