Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services Ltd.

I'm sure it's going to be another week full of fun, frivolities and far, far, far too much fresh super juices with charcoal and goji berries - oh no, hang on a minute, that's a different week. It's APPEC 2017, so scrub that. At this very minute I feel relatively OK and I'm pretty sure the rest of the market does as well, but let's revisit this question at 5.30 pm Thursday evening. Brent closed Friday up $0.43 to $56.86 and WTI closed at $50.66, up $0.11. Crude is certainly the star performer of Q3 commodities, isn't it? What will Q4 bring? Well, eyes will be on Vienna I am sure. It will be interesting to see what OPEC do; they have to be kind to the market as it has repaid them with a steep rise in flat price, but if there are any mutings about "mission accomplished" then this market will forgive them about as quick as my wife does when I turn up from a night out three hours later than originally planned. Stories of market rebalancing seem to be more and more prevalent at the moment, and yes, there are signs that stocks are being drawn in the three main trading hubs of ARA, Houston and Singapore; but let me put this in to context (I touched on this last Friday): in the US, five-year average inventories are now 22% higher than they were at the end of 2014, while in ARA the increase in product stocks has been nearly 16%. The most recent data out from the EIA has total commercial crude stocks of over 472m bbl with a five year average of over 410m bbl. At the end of 2014, stocks were 353m bbl and their five-year average was less than 340m bbl. I think a Dear John letter should be written to OPEC with a simple statement: "Status Quo". Not the rock band with bald heads and pony tails, but just a gentle hint that things are OK right now; but they remain fragile, so just leave them as they are. I shall not be moving my price forecast this year, but I'll say this: the swimming costume is in my desk drawer just in case we get to $60 in the next three days.

Economic Data/Events: (UK times)

* 1:30pm: Chicago Fed National Activity Index, August

* 1:30pm: Federal Reserve Bank of New York President William Dudley delivers remarks at Onondaga Community College in Syracuse, New York

* 1:30pm: Bloomberg forecast of U.S. waterborne LPG exports

*No exact timing:

** Consultant Ibrahim Al-Muhanna, former adviser to Saudi energy minister, speaks at Petro Diplomacy Conference, Washington, D.C.

** Asia Pacific Petroleum Conference, APPEC, Singapore, 1st day of 3. Pre-conference workshop, with speakers from Chevron, Eni, Statoil, Unipec, Essar Oil, among others

** FT Commodities Summit Asia, Singapore. Speakers are from Cargill, Louis Dreyfus, Gunvor, BofAML, Olam, Maersk Oil Trading, Trafigura

* Russia's full month Urals program for October

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

** Iraqi Kurdish independence referendum

Singapore 380 cSt

Oct17 - 329.25 / 331.25

Nov17 - 326.25 / 328.25

Dec17 - 323.25 / 325.25

Jan18 - 320.75 / 322.75

Feb18 - 318.75 / 320.75

Mar18 - 317.75 / 319.75

Q4-17 - 326.25 / 328.25

Q1-18 - 319.50 / 321.50

Q2-18 - 316.25 / 318.75

Q3-18 - 313.50 / 316.00

CAL18 - 315.50 / 318.50

CAL19 - 305.00 / 310.00

CAL20 - 293.00 / 300.00

Singapore 180 cSt

Oct17 - 334.00 / 336.00

Nov17 - 332.00 / 334.00

Dec17 - 329.50 / 331.50

Jan18 - 327.00 / 329.00

Feb18 - 325.50 / 327.50

Mar18 - 324.75 / 326.75

Q4-17 - 331.75 / 333.75

Q1-18 - 326.00 / 328.00

Q2-18 - 322.25 / 324.75

Q3-18 - 320.00 / 322.50

CAL18 - 322.50 / 325.50

CAL19 - 313.75 / 318.75

CAL20 - 302.00 / 309.00

Rotterdam 380 cSt

Oct17 312.25 / 314.25

Nov17 307.75 / 309.75

Dec17 303.75 / 305.75

Jan18 303.25 / 305.25

Feb18 302.75 / 304.75

Mar18 302.25 / 304.25

Q4-17 308.00 / 310.00

Q1-18 303.50 / 305.50

Q2-18 301.50 / 304.00

Q3-18 299.00 / 301.50

CAL18 299.50 / 302.50

CAL19 287.25 / 292.25

CAL20 268.25 / 275.25

Founded in 2002, Freight Investor Services is a specialist in dry bulk and commodity derivatives, including cargo freight, iron ore, fertilizer and bunker fuel. The company has offices in London, Dubai, Singapore and Shanghai.

For further details about fuel oil swaps or to discuss trading opportunities, please contact Andrew Cullen, Client Relations & Development Manager, on +44 207 090 1126, or email AndrewC@freightinvestor.com.


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Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

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