Sending contact reports sends BDU the location, numbers, direction, speed etc of an enemy task force or convoy. Later in the game its how wolfpacks develop with one sub who finds the convoy shadowing it but staying out of sight to keep updating its contact position whilst other U-boats rush to reinforce and form a wolfpack.
I've personally never seen that happen - but apparently it can with the mods like TDW's AI mods etc.
If you are in range of Luftwaffe support Goering might let one of his flyboys come and have some fun with a convoy if you call it in. I have seen this happen. Its awesome.
I don't know what reporting weather conditions does (if anything) in game.
Re: Fuel - use the Kiel Canal. And I think the most fuel efficient speed is about 10 knots. You wont get a request for resupply accepted until Operation Drumbeat (I think) when the milch cow U-boats become available.
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