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Oil and fuel oil hedging market update

01 Nov 2017 09:05 GMT

By the Oil Desk at Freight Investor Services.



Brent closed up $0.35 last night to $60.94 and WTI closed at $54.38, up $0.23. Who would have thought we'd be up to these dizzying heights? There just seems to be something uneasy about it all though; it doesn't feel comfortable. As quick as this market is to rally, it is also extremely capable of collapsing, and it doesn't take much to really cause a collapse. If the funds have bought in to this rally, then what's to stop them cashing out and selling their long positions? As Paul Daniels would say, "not a lot". However, I think it will be a while yet before we see any kind of price correction. EIA data is out later and, according to API, we can expect to see some pretty chunky drawdowns on crude and products.

Fuel Oil Market (October 31)

The front crack opened at -7.80, strengthening to -7.30 across the day. The Cal 18 was valued at -8.10.

Aggressive offers continued to weigh on the break-bulk ex-wharf premiums of Asia's 380-cst fuel, with some suppliers seeking to stimulate demand.

Demand for spot 380-cst ex-wharf fuel oil has been sluggish in recent weeks amid rising outright prices of 380-cst bunker fuel which has climbed to its highest level since June 2015, keeping some buyers at bay, sources said.

China said it would stop domestic sales of diesel with sulphur content higher than 10 parts ppm, typically used by tractors and ships, from Nov. 1, in its latest effort to clean up the nation's air.

The challenge will be in the execution of the ban, which follows a move earlier this year to stop sales of diesel with more than 50 ppm of sulphur and a 10-ppm cap on diesel used by cars.

Economic Data/Events: (UK times)

* 11am: U.S. MBA mortgage applications for week ended Oct. 27 (prior -4.6%)

* 12:15pm: U.S. ADP employment change for Oct., est. 200k (prior 135k)

* 1:45pm: U.S. Markit manufacturing PMI for Oct., final, est. 54.5 (prior 54.5)

* 2:30pm: U.S. EIA oil inventory report; TOPLive blog coverage begins 2:25pm

* 6pm: U.S. FOMC rate decision, est. 1.25% (prior 1.25%)

** Genscape weekly ARA crude stockpiles report

** International Energy Forum hosts 7th Asian Ministerial Energy Roundtable, Bangkok, Nov. 1-3. Speakers include Saudi Arabia's Energy Minister Khalid Al-Falih, U.A.E. Energy Minister Suhail Al Mazrouei

** International Emissions Trading Association event in London, ahead of the COP23 climate talks that will take place in Bonn starting Nov. 6

** Bloomberg will publish October monthly tanker-tracking assessments for several oil exporting nations, starting Wednesday

** Bloomberg will publish OPEC production survey for October on this day, or Thursday. Data may be the last entire-month set available before OPEC's next ministerial conference on Nov. 30

** International Petroleum Tax Conference, Oslo. Speakers include Norway Ministry of Finance's Tax-Law Director Stig Sollund

** Earnings: Occidental Petroleum

Singapore 380 cSt

Dec17 - 359.25 / 361.25

Jan18 - 357.00 / 359.00

Feb18 - 355.25 / 357.25

Mar18 - 353.25 / 355.25

Apr18 - 351.00 / 353.00

May18 - 349.75 / 351.75

Q1-18 - 353.00 / 355.00

Q2-18 - 348.50 / 350.50

Q3-18 - 343.25 / 345.75

Q4-18 - 338.25 / 340.75

CAL18 - 344.75 / 347.75

CAL19 - 328.25 / 333.25

CAL20 - 301.75 / 308.75

Singapore 180 cSt

Dec17 - 364.25 / 366.25

Jan18 - 353.50 / 355.50

Feb18 -360.75 / 362.75

Mar18 - 359.25 / 361.25

Apr18 - 357.50 / 359.50

May18 - 356.50 / 358.50

Q1-18 - 359.00 / 361.00

Q2-18 - 355.00 / 357.00

Q3-18 - 349.75 / 352.25

Q4-18 - 345.75 / 348.25

CAL18 - 351.50 / 354.50

CAL19 - 337.25 / 342.25

CAL20 - 311.25 / 318.25

Rotterdam 380 cSt

Dec17 338.75 / 340.75

Jan18 337.00 / 339.00

Feb18 336.00 / 338.00

Mar18 335.25 / 337.25

Apr18 334.50 / 336.50

May18 333.50 / 335.50

Q1-18 335.25 / 337.25

Q2-18 333.00 / 335.00

Q3-18 328.75 / 331.25

Q4-18 321.25 / 323.75

CAL18 328.00 / 331.00

CAL19 289.00 / 294.00

CAL20 246.00 / 253.00



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.


Image: Freight Investor Services (FIS) logo. Image credit: Freight Investor Services (FIS)




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