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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil and fuel oil hedging market update

05 Dec 2017 09:35 GMT

By the Oil Desk at Freight Investor Services.



Commentary

Brent closed down $1.28 last night to $62.45 and WTI closed at $57.47, down $0.89. "Watch WTI/Brent spread with eye like eagle," Confucius says. Current trading -4.90. Based on what I was saying yesterday - and how OPEC have only succeeded in filling every single Stetson in the Permian basin with a load of Benjamins - then it should be no surprise with more WTI-priced oil in the export market, that we see that spread come close to parity sooner rather than later.

It seems as if the market hasn't received OPEC's briefcase full of extension and compliance talk that well so far. Granted, we are in the middle of the 60-65 range, but I'm sure the market reaction is not the one OPEC were hoping for. API out later.

Fuel Oil Market (December 4)

The front crack opened at -8.60, weakening to -8.75, before strengthening to -8.65. The Cal 18 was valued at - 8.00.

The backwardated structure of Asia's front-month time spreads for 180 cSt and 380 cSt fuel oil traded lower at the start of week as expectations of ample near-term supplies weighed.

In the physical markets, strong buying interest for 180 cSt fuel oil cargoes boosted cash premiums of the fuel. By contrast, aggressive supplier offers for 380 cSt fuel oil cargoes weighed on premiums of 380 cSt fuel oil despite active trade.

While arbitrage volumes from northwest Europe to Asia are expected to slow in December and January, industry sources said these would be offset by increased flows from elsewhere including Asia, Latin America and the Middle East.

Premiums of the mainstay 380 cSt front-month time spread fell to near two-month low of 50 cents a tonne, down from a premium of $1 a tonne in the previous session.

Russian October fuel oil output climbed to 3.951 million tonnes in October, rebounding from a record low of 3.519 million tonnes the previous month.

Economic Data/Events: (UK times)

* 2:45pm: U.S. Markit Services PMI. Nov. (final)

* 3pm: U.S. ISM Non-Manf. Composite, Nov.

* 9:30pm: API issues weekly U.S. oil inventory report

* Today:

** Gulf Cooperation Council states scheduled to hold a summit in Kuwait, their first since a Saudi-led alliance began a boycott of council member Qatar. 1st day of 2

** Annual Shutdowns Turnarounds Superconference, Calgary. Day 1 of 2

** Cowen Energy & Natural Resources Conference, final day

** Census bureau releases crude export data through October 2017

** Bloomberg-compiled refinery snapshot, looking at key outages at refineries in the U.S. and Canada, and providing offline capacity projections for crude units and FCCs

Singapore 380 cSt

Jan18 - 354.50 / 356.50

Feb18 - 354.25 / 356.25

Mar18 - 354.00 / 356.00

Apr18 - 353.50 / 355.50

May18 - 352.50 / 354.50

Jun18 - 351.50 / 353.50

Q1-18 - 354.25 / 356.25

Q2-18 - 352.50 / 354.50

Q3-18 - 348.25 / 350.75

Q4-18 - 343.25 / 345.75

CAL18 - 349.75 / 352.75

CAL19 - 315.00 / 320.00

Singapore 180 cSt

Jan18 - 359.00 / 361.00

Feb18 - 359.25 / 361.25

Mar18 - 359.25 / 361.25

Apr18 - 359.25 / 361.25

May18 - 358.25 / 360.25

Jun18 - 357.25 / 359.25

Q1-18 - 359.00 / 361.00

Q2-18 - 358.25 / 360.25

Q3-18 - 354.50 / 357.00

Q4-18 - 349.50 / 352.00

CAL18 - 355.75 / 358.75

CAL19 - 323.75 / 328.75

Rotterdam 380 cSt

Jan18 338.75 / 340.75

Feb18 339.25 / 341.25

Mar18 339.50 / 341.50

Apr18 339.00 / 341.00

May18 338.00 / 340.00

Jun18 337.00 / 339.00

Q1-18 339.00 / 341.00

Q2-18 338.25 / 340.25

Q3-18 333.50 / 336.00

Q4-18 325.00 / 327.50

CAL18 333.75 / 336.75

CAL19 294.75 / 299.75



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.


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




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