Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services Ltd.

Commentary

Brent closed up $0.33 last night to $56.94 and WTI closed up $0.38 last night to $51.30. We've all been there - you know when you are so desperate for the bathroom but it's on the 15th floor, you're on the ground floor and all elevators are on the 30th floor. You press that button so ferociously over and over again that it nearly breaks. What's the point? It's not the button's fault but press away you do in the desperate hope that miraculously an elevator will stop and drop to the ground floor just for you. This hope seems to be where OPEC is right now. They're desperate for the bathroom and all elevators are on the top floor. You have to admire them - they keep on saying that demand is going to increase and that distillate stocks are low coming into winter. Then bam, about 8 hours later API release data that shows stocks are building - distillates included. It's like the US has sent every elevator down to the ground floor for OPEC, but pressed every floor on the way down. Excruciating. However, my negativity is making me feel a little uneasy. There comes a point where you read so much about demand and global economies growing that eventually you start to believe them. Even though there isn't really any tangible proof to evidence such positivity. Have I missed something? Or am I being sucked into a false dawn like an over-enthusiastic intern writing something to his bosses to prove he/she is worth a job? Perhaps my ignorance is dangerous, but I'd much rather sit here and opine on facts that I would on hope. EIA out at 4pm British time. IEA report out today at 11am as well, so keep your eye on the screen coming in to the window.

Fuel Oil Market (October 10)

The front crack opened at -8.10, strengthening to -7.60 across the day. The Cal 18 was valued at -8.30.

The November East-West spread was little changed on Wednesday, keeping the arbitrage window for shipping fuel oil into East Asia open, industry sources said.

Fujairah fuel oil inventories fell 782,000 barrel (or about 117,000 tonnes) to 8.503 million barrels (1.27 million tonnes) in the week to Oct. 9. Fujairah fuel oil inventories are now at their lowest since Feb. 20, and are at their third lowest level since records began in January

India has reduced the goods and service tax (GST) on marine fuels, to 5% for all vessels, the government said on Wednesday, which should help the country's fuel sellers compete with other lower-tax ports in Asia.

Economic Data/Events: (UK times)

* 7:45am: France CPI y/y for Sept., final, est. 1% (prior 1%)

* 9am: IEA monthly oil market report, detailing September production and world supply/demand forecasts

* 9am: Singapore onshore oil-product stockpile data

* ~12pm: Russia refining maintenance schedule from ministry

* 1:30pm: U.S.

** PPI final demand m/m for Sept., est. 0.4% (prior 0.2%)

** Initial jobless claims for week ended Oct. 7, est. 250k (prior 260k)

* 2pm: Russia gold and forex reserve for week ended Oct. 6 (prior $424b)

* 4pm: U.S. EIA weekly oil inventory report; delayed from Wednesday due to Monday's U.S. holiday

Singapore 380 cSt

Nov17 - 328.50 / 330.50

Dec17 - 326.50 / 328.50

Jan18 - 324.50 / 326.50

Feb18 - 322.75 / 324.75

Mar18 - 321.50 / 323.50

Apr18 - 320.50 / 322.50

Q1-18 - 322.75 / 324.75

Q2-18 - 319.00 / 321.00

Q3-18 - 315.25 / 317.75

Q4-18 - 312.25 / 314.75

CAL18 - 315.00 / 318.00

CAL19 - 295.25 / 300.25

CAL20 - 276.25 / 283.25

Singapore 180 cSt

Nov17 - 333.25 / 335.25

Dec17 - 331.75 / 333.75

Jan18 - 330.75 / 332.75

Feb18 - 329.50 / 331.50

Mar18 - 328.50 / 330.50

Apr18 - 327.50 / 329.50

Q1-18 - 329.50 / 331.50

Q2-18 - 325.75 / 327.75

Q3-18 - 321.75 / 324.25

Q4-18 - 319.75 / 322.25

CAL18 - 322.25 / 325.25

CAL19 - 304.50 / 309.50

CAL20 - 285.75 / 292.75

Rotterdam 380 cSt

Nov17 309.75 / 311.75

Dec17 305.50 / 307.50

Jan18 305.00 / 307.00

Feb18 304.50 / 306.50

Mar18 304.00 / 306.00

Apr18 303.25 / 305.25

Q1-18 304.50 / 306.50

Q2-18 302.50 / 304.50

Q3-18 299.00 / 301.50

Q4-18 293.75 / 296.25

CAL18 298.50 / 301.50

CAL19 278.00 / 283.00

CAL20 256.75 / 263.75

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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